more-arw search

WellPoint CFO Sees Rise in M&A

The drive for access to Medicare patients will fuel further acquisitions.

As the number of smaller health insurers shrinks, one CFO thinks the market for those that remain could grow substantially more competitive.

Wayne DeVeydt, CFO of the country's second-largest health insurer, WellPoint, told Reuters that the market for smaller acquisitions could grow substantially. Earlier in the week, Cigna completed a deal for HealthSpring for a staggering $3.8 billion, the largest deal in the industry in more than six years.

The move seemed to confirm the market's expectation of more blockbuster mergers and acquisitions, but DeVeydt tends to think there will be more smaller mergers as companies look to expand without worrying about regulators.

"People aren't willing to put at risk a big break-up fee if they don't think they've got a really good shot at getting it through FTC," DeVeydt told the news source. However, he noted that many would be forced to get involved in the market simply because of the limited number of remaining assets.

DeVeydt's caution may be well-advised, given that the American Medical Association recently released a report calling out the lack of competition in most American health insurance markets, according to The Chicago Tribune.