PPO company Viant (owner of Beech Street and PPONext) will be acquired by larger PPO company MultiPlan.
The announcement came last week; here’s the lead from the internal memo to employees:
“After much thought and deliberation by our Board of Directors and our Executive Team, we have decided to pursue a new chapter in Viant’s long history. Therefore, it is with pleasure that we announce that Viant and MultiPlan have reached an agreement where MultiPlan will acquire 100% of Viant sometime over the next several months.
This decision was not reached lightly. Viant has demonstrated tremendous resiliency over the years, overcoming market and competitive challenges while still growing the business at attractive rates. However, the current U.S. economy and the political momentum around health care reform are very real and represent significant risks. As a result of these challenging and uncertain times, we have considered the most favorable strategic options available to our company that enable us to strengthen our position in the managed care industry and continue to grow. Clearly, economies of scale permit larger companies greater opportunity for growth and cost savings when facing uncertain times.”
The two companies have significant overlap in their PPO networks; both claim five thousand plus hospitals and six hundred thousand plus other providers. It is highly likely the successor organization will pick the best discount deals from either network, giving customers (potentially) larger savings on some bills.
Unsurprisingly, there will be staff reductions; here’s how Viant bosses Dan Thomas and Tom Bartlett put it: “Predictably, as the two companies integrate, downsizing will occur over time where redundant resources and costs are most apparent. We are confident that as this process evolves, the new company will endeavor to retain the most talented and professional employees from both organizations in order to emerge with visibly greater expertise and productivity.
There is no doubt Viant’s team is viewed very favorably by MultiPlan and it is committed to ensuring we achieve this objective.”
So, what does this mean?
Large, broad-based, national PPOs have been faltering of late, as their ability to extract discounts from providers, especially hospitals, has diminished. Over the last few years we’ve seen the PPO market consolidate, with Beech bought by Concentra, First Health take over CCN, Coventry acquiring Concentra and First Health, and Aetna’s purchase of PPOM.
Expect this to continue, but it’s a losing game. PPOs are a cost containment solution that has fallen out of favor. While there will always be a place for them (think out of area coverage, work comp, companies with widely spread workers) they will continue to lose share to more tightly managed networks, vertically integrated systems, and Blues plans.
Aug
10
