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Aetna’s HMS purchase

In yet another sign that the group health world is consolidating, Aetna has purchased PPOM, the dominant non-Blues network in Michigan, along with parent company HMS Health. PPOM looks to be the prize of the deal, as it adds a very strong network to Aetna’s offerings, while removing PPOM from the target list of Anthem, United, et al.
PPOM has 11% market share (defined as 11% of ALL state residents) in Michigan covered by its more than 27 thousand providers in the state. The network also has about 30,000 additional providers contracted in other Midwestern states.
For Aetna, with a paltry 262,000 insureds in Michigan out of its total population of 14 million, the acquisition opens up a significant market where it was previously virtually unable to compete. The acquisition also strengthens the Hartford, CT-based insurer in Colorado, as it includes the Sloans Lake and Mountain Medical networks.
The usual post-deal press releases indicate the new Aetna companies will continue to operate under their present names, staff will not be affected, etc. Perhaps true over the short term, but highly unlikely over the long. This industry is just too competitive to forgo any expense reduction opportunities.
Notably, two of Aetna’s competitors, Humana and MCare, also access PPOM. Although Aetna has said they will continue to provide access to the networks in Michigan to these other entities, one has to wonder how long that will last. Perhaps when Aetna’s membership grows enough to justify losing the other payers’ access fee revenue…
For work comp payers, PPOM is almost the only game in town in Michigan. With Aetna’s workers comp network still struggling to gain traction, one can see a strong push by management to non-renew other WC PPO contracts in an effort to grow the Aetna WC business.
What does this mean for you?
Hold on to your smaller PPO and HMO stock holdings. Someone is bound to come knocking soon. If you are a mid-tier player, sell while you still have some membership left.

One thought on “Aetna’s HMS purchase”

  1. Does anyone know roughly how much PPOM charges Per Member Per Month to provide their services

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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