Vegas – the elephant hunt is on

It’s got to be weird.

Former competitors standing next to each other in the booth, greeting guests at their events, talking up the advantages of companies they were competing with just a month ago.

It may be even stranger for those people who were not competing but now are, the ones whose companies have acquired units that now conflict with companies they used to work with, or at least be supportive of.

Nonetheless thats where the industry is these days. And that consolidation and disruption is going to continue for the foreseeable future. The word from the investors I’ve spoken with is that they are still very actively pursuing investments in work comp.  Met with several yesterday who were on the floor and in meetings all day, looking for the next deal.

My sense is the interest is primarily in big deals – not taking companies from $20 million to $100 million but from $400 million to a billion dollars plus. Sure, the smaller deals will continue, but the big stuff is where the focus is these days.

Here’s a very brief take on what I see happening.

Coventry is going to get lots if attention as investors seek to pull it out of Aetna and either operate it as a standalone or use it as a platform to compete with.  For all the reasons I enumerated here, that isn’t going to happen.  If anything, the current Obamacare debacle will make it even less likely Aetna exits a complementary, fee-based, non-PPACA-affected business.

Not gonna happen.  If anything, Aetna is going to look to add to their work comp portfolio; expect to see them in the hunt, albeit very selectively.

One Call is reported to be looking for add-on deals, and I’d have to think one likely product-market is work comp PBM and a broader network.  The Apax folks are here and, according to a couple reports, asking lots of questions about market opportunities.

Expect OCCM to add business, although the prices current owners will demand are going to be outrageous unthinkable in line with the Align/One Call multiples.

Stratacare was mentioned several times; there’s been lots of talk over the last few months but no public action.  I’d have to expect something will occur here; perhaps KKR, the new owners of Mitchell, will make a play to buy them out and consolidate the bill review industry.  If they do, I have to believe Medata and MCMC would be licking their chops.

What does this mean for you?

A very busy holiday shopping season!