Skip to Content

Centene expands into behavioral health with a $2.2B acquisition, just weeks after dipping further into pharma

On January 4, 2020, Healthcare Dive reported on Centene's recent announcement of a definitive agreement to acquire Magellan Health for $2.2 billion. This was shortly after acquiring specialty pharmacy insurer Pantherx.

On January 4, 2021, Centene announced a definitive agreement to acquire Magellan Health, an insurer with a vast behavioral health network, for $2.2 billion. Centene claims that in light of the pandemic, there is no better time to sharpen their focus on behavioral and mental health, helping people with chronic conditions dealing with mental health issues during an indisputably difficult time for so many people. This sounds accommodating, but let’s break this deal down and look at it from the perspective of the company’s overall trajectory.

Centene asserts that they are determined to expand the range of products offered in their markets so they can help more individuals. The news of this agreement comes just weeks after another Centene acquisition of specialty pharmacy insurer Pantherx. Specialty pharmacies typically offer services beyond their retail peers, including adherence management, help with prior authorization, financial assistance and patient monitoring. This means that as Centene acquires a special pharmacy like Pantherx and Magellan, they ultimately increase control over directive services, which could easily be used to point members—including those with rare and complex behavioral health diseases—to Centene-owned services and grow their own bottom line.

This push into behavioral health doesn’t come as a shock, as Centene has never been shy about buying to gain an advantage in new markets. In 2020, Centene gained an edge in the Medicare Advantage market by doubling its footprint through the purchase of rival WellCare for $17 billion. Before then, In 2018, Centene purchased Fidelis Care for $4 billion, allowing themselves to take hold of the second-largest managed care market in the country (New York). And even before that, in 2016, Centene acquired the insurer, HealthNet, to become the largest Medicaid managed care company in the country.

With this knowledge of Centene’s previous acquisition history, it seems they are on a path to enjoy less competition, and greater control of the entire healthcare consumer experience, by absorbing their competitors. We will be keeping an eye on this payor, as it will be interesting to see what else they’re looking to gobble up.

Original Article:

Subscribe to Un-covered Essentials

Insurer policies limit coverage and disrupt patient care, while producing record profits for corporate shareholders. Stay informed with the Un-covered newsletter.