Walmart’s acquisition of Humana is set to converge businesses and transform the healthcare industry

Walmart’s acquisition of health insurance company, Humana will take healthcare market to a different level as the entire healthcare system will converge. If things work well for these strange bedfellows, it will make Prescription Benefit Management- PBM model quite extinct. This deal is sure to have a transformational impact on the healthcare industry.

Now, businesses are converging with traditional healthcare, technology companies and retail companies coming together to result in a completely new healthcare landscape.

It is believed that when retailers merge with insurance companies, policy holders will benefit through less expensive services- clinic visits and low drug prices. It’s predicted that healthcare facilities will improve. But, things might just be the reverse and we have to wait and watch if the patients i.e. the end customer benefits, as prices may rise.

As CVS-Aetna and Walmart-Humana come together they might negotiate for better prices with hospitals and drug manufacturers. Eventually, keeping the savings as profits and making the deal not beneficial for patients.

Average spending of Americans on healthcare in 2016 was $10,348 per person thus, retailers who operate on less margins in their business, find healthcare an attractive market since it works on high margins.

Right now, we are witnessing vertical merger, where two companies at different stages of production process plan to merge. This is a unique arrangement. If two hospitals merge it would be a horizontal merger, which could create a dominant position for the merged entity and consolidations might result in less competition and higher prices.

Though, it’s obvious that this deal is going to have huge impact on the healthcare industry we have to wait and watch how it will benefit patients/end consumers?

LH logo.png