Cigna invested US$550 million on Tuesday to rescue a quasi-competitor.
The insurance company’s investment in Bright Health Group, another insurance company, continues Cigna’s trend of cooperating with companies that, on the surface, should be competitors. The company also partnered with Oscar insurtech to create a co-branded product for the small group market, and partnered with Amazon to help deliver prescription drugs to customers’ doorsteps.
Healthcare industry veteran Rick Kes said that these collaborations with small insurance companies and technology companies will help Cigna bridge the blind spots of its insurance products and add new customers to its health services department, enabling it to better compete and imitate UnitedHealth The strategy of large insurance companies such as Group. RSM analyst.
“This must be a strategy, how do we get better together?” Case said. “The room is much like these large national plans. They won’t work with us. So, you know, maybe we defeated them and worked with these budding organizations to try to win away from United or Anthem’s business.”
Cigna said it will explore how its Evernorth health services division can create customers from Bright’s growing NeueHealth value-based clinic division, which is usually on a par with UnitedHealth Group’s Optum subsidiary.At the same time, insurance companies are also developing Yongbei Case said that as a platform, customers of other health plans and providers can use it to digitize their business, also following the Optum route. Evernorth is by far the most profitable part of Cigna.
“You have to look at what they are doing and say,’Well, how do we replicate it, or how do we compete with Manchester United? When we move from traditional fee-for-service to value-based care?'” Case said. “Insurers need to have a doctor element to do all these things.”
Cigna’s cash will provide Bright Health with the funds needed to develop its clinical department.
If Bright Health’s financial situation continues to decline, this investment can also give Cigna a firm foothold in the insurance company.this The company’s valuation has fallen From 12 billion U.S. dollars at the public offering in June to approximately 2.5 billion U.S. dollars today. Through this investment, Cigna now owns about 25% of the young company’s shares, but neither company responded to interview requests. This five-year-old startup aims to be profitable by 2024.
Ari Gottlieb, head of A2 Strategy Group, said: “They have adopted some hedging strategies by establishing partnerships and investments in startup health plans as actual corporate strategies.”
Gottlieb said that if Bright Health abandons, the investment will make Cigna the top priority for the acquisition of NeueHealth and its Medicare Advantage-based business. He said that if Bright Health rebounds, the insurance company will add approximately 900,000 members to its health services department. He said the company may switch from MedImpact pharmacy welfare manager to Cigna’s Express Scripts. Insurance companies obtain a 5% annual return guarantee through debt convertible financing transactions.
“Cigna’s strategy is that the risk of these things is very low,” Gottlieb said. “If they work, that’s fine. If they don’t work, this is a footnote.”
By cooperating with Oscar and Bright Health Group, Cigna stated that it does not view these companies as direct competitors.Its cooperation with Bright represents a way to add new clinical assets and transform Bright’s members into medical service customers, while the cooperation with Oscar Health provides it with a Get a foothold in a small group, It’s not traditionally powerful, Gottlieb said.
Cigna may not consider these startups as competitors. But for each other, Oscar and Bright Health certainly are. Case said these companies will continue to compete with each other in individual trading markets, where “there must be considerable consistency.”
“You have two different competing interests in Cigna’s investment strategy, so you have to make them all happy,” Case said. “Obviously, you won’t get into these relationships without trying to develop it and make it meaningful. So, I think they have to be very careful about how they do it.”