The Law Office of Lynnette Ariathurai A Professional Corporation

ACA ignites rush to business merger deals in healthcare industry

The healthcare industry can be affected by various factors, including changes in healthcare laws. The Affordable Care Act (ACA) has definitely caused a significant change in the healthcare industry in California. The influx of money from the ACA into the healthcare industry has begun a sector-wide trend towards consolidation. This has manifested in a business merger frenzy throughout the medical sector.

The latest merger deal in the healthcare industry is set to be worth $6.8 billion. The deal was initiated when Medicaid insurance company Centene Corp. convinced insurer Health Net Inc. to be purchased. The announcement for this latest healthcare acquisition was made in early July. However, this is expected to be only the latest in a slew of upcoming medical sector mergers resulting from effects of the ACA.

The main reason that health insurers are moving towards mergers is so they can capitalize on the expected influx of spending on medical insurance in the ACA exchanges. They are also expecting increases in spending in Medicaid programs and Medicare Advantage as well. The most desirable companies for large medical insurers to acquire are firms the can help increase the company to secured government business.

However, the process of a business merger may not be a simple and straightforward affair in California. There are various legal aspects to consider when defining the terms of a potential merger deal in the healthcare industry or in any other industry. Once the terms of an acquisition have been agreed upon the necessary legal documents must be drafted in order to complete the deal.

Source: Los Angeles Times, "Obamacare cash fuels healthcare merger mania", Chad Terhune, July 2, 2015

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