M&A activity in 2018 remained healthy in the $40 billion wellness sector. Big players used M&A to get bigger, and private equity investors played both sides of the trade–selling assets to realize gains and buying platforms to effect consolidation. Consolidation has been driven, in no small part, by employers' desire to reduce the number of benefits vendors they use. Consolidators have acquired best-in-class point solutions to integrate into end-to-end solutions. Continued tightening in the U.S. labor market added to industry momentum. Unemployment ended the year at 3.9%, real average weekly earnings grew by 1.2% in 2018. Employers looked for benefit packages that included wellness offerings to recruit and retain employees.
For perspective, employers are the largest conduit for healthcare coverage in the U.S. According to the Kaiser Family Foundation, 56% of the non-elderly population in the U.S., more than 152 million people, received health insurance coverage from employers in 2016. In addition, 60% of workers covered by employers are in self-funded plans, meaning that the employer, not an insurance company, is responsible for the cost of healthcare not funded by employee-paid premiums, co-payments and deductibles. Self-funding skews heavily toward large employers – 91% of employers with 5,000 or more workers are self-funded, versus 23% of employers with 50 to 199 workers.
United States: Healthcare IT Insights – Winter 2019
by Brooks Dexter, Eric Coburn, Philip Smith, Adam Stormoen and Jordan Lampos, Duff and Phelps | February 26, 2019
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