Market consolidation continues unabated…
Industry giant United Healthcare is acquiring Fiserv’s TPA and related businesses for $775 million in cash. The deal, slated to close either this quarter or next, does NOT include Fiserv’s third party biller operations.
Fiserv’s TPA was formerly the benefits operation of Wausau Insurance, a business that was spun off/left behind when Liberty Mutual bought parent company Wausau Insurance.
The old Wausau group operation grew to become the largest TPA in the country before it was acquired by Fiserv.
Fiserv’s Third Party Solutions unit just acquired competitor WorkingRx a few weeks ago, when UHC and Fiserv were likely deep in conversations regarding the bigger deal. The obvious question is why was the third party biller (TPB) business not part of the UHC acquisition?
There are at least two possibilities.
1. UHC did not want the TPB.
2. UHC did want it, but the financials did not make sense so the TPB unit was scratched from the deal.
Regardless, things may well be getting lonely for TPS at Fiserv. The company has been shopped as recently at ten months ago, with at least two suitors saying they would only buy it if they could have exclusive rights to negotiate to merge it with WorkingRx. Thosee proposals were rejected, and as it turned out, the parent company decided to ‘do the deal’ themselves.
What does this mean for you?
Two things.
1. Consolidation in an already-mature industry.
2. An uncertain future for the third party biller industry.
A third possiblility is that UHC recognizes that intermediaries provide limited growth opportunity -Medicare will not deal with intermediaries, group health tends to follow the Medicare lead leaving intermediaries to operate on the fringe.
What happened to P2P in the UHC deal? I continue to wonder why Fiserv made that acquisition.