2023 Outlook: With High Debt Loads, More Providers Will Be Purchased by Insurers

  • Jan 13, 2023

    Health care transactions, particularly in the provider space, appear poised for another banner year, even as inflation, rising interest rates and a possible recession slow mergers & acquisitions (M&A) across the rest of the economy. Some providers are in financial crisis and seem sure to consolidate with each other or be taken over by private equity entities, while health insurers seem poised to spend pandemic-related windfalls.  

    Generally, health insurers are in good financial health. The health insurance business is somewhat protected from inflation, as carriers can pass through rising prices to commercial plan sponsors. Meanwhile, risk in government books of business is ultimately borne by the public. In addition, many carriers have plenty of cash on hand, meaning they are also insulated from rising interest rates. In spring 2020, when COVID-19 hospitalizations hit their first nationwide peak and local governments shuttered many businesses and in some cases barred nonessential medical procedures, health care utilization cratered. Utilization did not approach normal levels until the end of that year, and so premium revenues far outstripped claims paid for most insurers.  

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  • Peter Johnson

    Peter has been a reporter for nearly a decade. Before joining AIS Health, Peter covered a wide variety of topics in his hometown of Seattle, where he continues to live. Peter’s work has appeared in publications including The Atlantic and The Stranger. Peter attended Colby College.

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