News + Resources

Monday • November 14, 2016

Market Consolidation within the Healthcare Industry

Authored by: Karen Ernst, Sr. Vice President and Partner

Healthcare market consolidation continues to impact healthcare stakeholders as they seek integrated relationships and economies of scale, aimed at increasing their bargaining power and market share. Consolidation has been evident across many healthcare stakeholders including large national health plans, health systems, physician groups, pharmacy benefit managers (PBMs), and specialty pharmacy providers (SPPs)

The Brooks Group projects this trend to continue to accelerate, as providers and insurers each have reasons to pursue consolidation. For providers, it is increasingly difficult to operate as an independent practice. New systems of care (such Accountable Care Organizations or ACOs) require more infrastructure, resources, and funding to implement new measurement systems.

Health plans are seeking integrated relationships and larger footprints as they compete for lives through Medicaid expansion, health insurance marketplaces, increasing numbers of Medicare beneficiaries and broader contracting relationships with providers through alternative payment models.

Pharmacy Benefit Managers (PBMs) have capitalized on this consolidation trend as the top three PBMs (Express Scripts, CVS Caremark, and Optum Rx) control almost 80% of the total market and have continued to expand their utilization of exclusionary formularies.

Specialty Pharmacy Providers (SPPs) are seeking additional relationships as they are faced with challenges competing for contracts due to limited distribution networks and attempting to grow through increased service offerings and expanding therapeutic area coverage.

It’s clear that market consolidation and integrated healthcare relationships will continue to impact the market across all stakeholders. The Brooks Group’s robust market landscape healthcare primers provide in-depth insights on a variety of topics impacting the market including implications specifically developed for life science companies.

For more information on how the changing healthcare landscape is impacting your business, please contact Karen Ernst, Partner and request a complimentary preview of our Healthcare Primers.

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