Arthur J. Gallagher (AJG) is poised for growth banking on top-line improvement, prudent acquisitions and a strong capital position.
Cboe Global Markets (CBOE) remains well poised for growth on the back of its strong market position and a global reach with potent proprietary products.
UnitedHealth (UNH) is set to buy Empresas Banmedica in order to expand its international operations.
Old Republic (ORI) estimates net realized investment gains of $150 million as well as to incur $45 million of additional expense in Q4. The company also approves a special dividend of $1.00 per share.
Let's see if Cigna Corporation (CI) stock is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks.
Let's see if Cigna Corporation (CI) stock is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks.
Centene, Cigna, Oscar Health and Blue Cross and Blue Shield plans stand to benefit from Obamacare in 2018 with less competition and the benefit of double-digit percentage price increases.
The Zacks Analyst Blog Highlights: Wal-Mart, Procter & Gamble, NVIDIA, Cigna and McKesson
Top Analyst Reports for Wal-Mart, Procter & Gamble and NVIDIA
Anthem's (ANTM) buyout of HealthSun reflects its long-term strategy to grow in the Medicare Advantage business.
While the political debate over a national healthcare system rages on, health insurance companies are pocketing Americans' hard-earned money -- and sometimes using less than ethical methods to do it.
Cigna's (CI) buyout of Brighter reflects its consistent efforts to scale up technological innovation.
Nicholas Blechman for hbr Rising pressure to achieve better medical outcomes with increasingly limited financial resources has created an acute need for more physician leaders. Several studies (including this one) have shown that doctors want to be led by other doctors; they trust physician leaders to make the right decisions about redesigning health care delivery and balancing quality and cost. Fair or not, they believe it’s harder for leaders without clinical expertise to see how cutting costs impacts quality of care. Yet most doctors in the U.S. aren’t taught management skills in medical school. And they receive little on-the-job training to develop skills such as how to allocate short- and long-term resources, how to provide developmental feedback, or how to effectively handle conflict – leadership skills needed to run a vibrant business. A popular way of bringing physicians up to speed is to elevate them into management roles and team them with business executives. But this approach, called the “dyad model,” is not an optimal long-term solution, for reasons we’ll describe. Rather, we suggest a different approach: carving out a career path for younger physicians with leadership potential and creating a well-designed development pipeline so doctors emerge able to effectively lead large organizations of medical providers. The Dyad Model and Its Limitations What often happens with the dyad model is senior physicians are paired with business executives, either as co-leaders or with one reporting to the other, to run an organizational unit, region, or business segment (e.g., acute care hospitals, rehab clinics, physician practices, and urgent care centers). Some health care businesses use duplicate dyad management structures—one to oversee the clinical enterprise and another to oversee the business and operations that support the clinical enterprise. It’s important to note that, in all cases, these organizations still need a chief medical officer (CMO) who focuses solely on clinical operations, and who oversees quality, compliance, and other key aspects of care. The CMO should not be part of the dyad model. The dyad model can help break down silos, improve the way clinical and operations leaders work together, and coordinate care. And this has produced good results at a number of organizations, including the Mayo Clinic (two leaders shared the top job until 2015), Cigna Medical Group, and Carle Foundation Hospital. However, dyads can create inefficiencies and duplication of resources (not to mention higher-than-necessary salaries) and delay decision-making. The model can also create confusion about roles and spawn outright conflict; we’ve seen power struggles between leaders with different priorities, who often issue conflicting messages to the areas they lead. Finally, this model doesn’t go far enough to prepare doctors to be organizational leaders. It doesn’t require physicians to learn deeply about the business and gain critical financial, operational, and management skills – limiting their ability to grow into stronger leaders or advance further in the organization. In an environment of intense cost pressures, we believe it’s more economically sustainable in the long run for a health care organization to have a single, highly effective physician leader running the business and holding both clinical and administrative responsibilities, rather than bifurcating the role. There are two reasons: One is you don’t need to pay two leaders to do the job that one highly capable leader could do. The second is, it can reduce physician turnover (and thus the cost of recruiting) and boost morale. While having such a big job may sound like a heavy burden – being responsible for clinical stewardship, key strategic and operational decisions, and financial management – when physician leaders’ development is effective, their roles are clear, and they know how to focus their attention, they can handle the job without burning out. But to do this, organizations need a cadre of physician leaders who are interested in taking on management roles and have the necessary business skills to lead effectively. Building a Physician Leadership Pipeline Based on work with dozens of health care organizations, we have adapted the leadership development model of Ram Charan et al to outline a leadership path for physicians. This pipeline moves physicians through five levels of leadership – each allowing them to take on greater responsibility and gain the experience and skills necessary for succeeding at the next level. Over time, they develop the capacity to lead beyond the clinical enterprise and a more holistic view of the organization’s needs. Each level involves a specific focus and set of skills: Individual Practitioner: This level comprises practicing physicians who are part of a practice, group, or solo private practice and are focused primarily on patient care. Technical proficiency is valued most in this individual contributor role. MD Leader: This level involves running a medical group, hospital program, or an academic medical center (AMC) division (as a medical director of a service line or group of MDs, or a leader of a clinic or residents/fellow program in AMC) and managing other physicians or a program. These leaders learn to oversee and delegate work, and develop and coach others. Emotional intelligence is an important skill to develop at this level. Market MD Leader: This role is responsible for a business segment or region, and oversees other MD leaders or a broader scope of clinical/MD staff (such as regional or market physician leader or chief of an AMC faculty division). This is where you often see dyad models emerge, as the role involves both clinical oversight and greater business responsibilities. The leader must learn how to manage financials, develop a longer-term view, and build knowledge of how to devise strategy. Communication and collaboration skills are paramount. Group MD Leader: This role oversees a group of businesses, often as group president or chief medical officer for a corporation or chair of an AMC faculty department, with responsibility often expanded to include both clinical and business outcomes. Here the leader must be proficient in evaluating strategy, portfolio assessment, and factoring in the complexities of both internal and external business requirements, in addition to the skills gained in prior roles. Enterprise MD Leader: This top leadership role, such as CEO, is responsible for an entire enterprise, including its strategic direction and overall organizational results. Leaders at this level emphasize visionary thinking, discerning key external trends, strategic positioning, and developing mission-critical priorities. At each level, the mix of strategic, business, relational and clinical skills required to lead is quite different. Creating a pipeline like this can help health care organizations recruit early-career physicians, develop their skills, and move them over time into key leadership positions. Consider the example of Sound Physicians. The Tacoma, Washington-based company is one of the nation’s largest providers of hospitalists and post-acute care, with more than 2,500 physicians in nearly 350 healthcare systems throughout the U.S. To support rapid growth, Sound Physicians sought to accelerate the development of its physicians’ leadership skills. The firm believed its dyad approach would not produce nearly the number of leaders that it needed. Since putting a leadership pipeline in place, the firm now sees improved morale and overall engagement, lower turnover, and a greater ability to attract new business partners (by being able to place more physicians and physician leaders in the field). TeamHealth, a provider of more than 1,000 physicians and 20,000 clinicians to healthcare institutions in the U.S., has seen similar results after starting to develop physicians through these five levels. Addressing Leadership Deficits Without a well-designed development pipeline in place, doctors often get promoted directly into leadership roles, skipping levels and moving, for example, from an individual contributor to a market MD leader or group MD. This can lead to poor management oversight, operational decisions that fail to control costs, and morale problems. Our pipeline approach allows health care organizations to ensure that doctors have the skills they need as they advance in their careers. It also helps identify and address leadership skill deficits early. Specifically, the pipeline can prevent the three most common ones we see: an inability to manage and develop others, poor relationship management skills, and lack of strategic perspective. Managing and Developing Others Leading requires the ability to plan one’s own work and the work of others. It also requires knowing how to delegate and mentor. This means physicians must learn to work more collaboratively — a style that isn’t nurtured in a command-and-control environment. One-on-one coaching is one way to address this gap, but for large organizations it’s often more economical to develop a program to help a broader group of physician leaders at once. This is what Sound Physicians found out. When we first met Dr. Rob Bessler, the physician CEO and founder, he was looking to reduce physician turnover and increase the growth of the business. (The company had been purchased by a private equity firm that believed Sound Physicians could scale its business.) His vision was to build the next generation of physician leaders. Dr. Bessler tried a number of off-the-shelf leadership programs, but they had little impact on turnover and did not interest physicians. Sound Physicians needed a customized physician leadership development program that focused at the bottom three levels: individual practitioners, MD leaders, and market MD leaders. The company identified the key leadership competencies (behaviors, beliefs, and knowledge) its physician leaders needed to support its values and direction. It then created a foundational leadership course that covered an array of management and leadership topics. The course brought together cohorts of physician leaders from each region. The structure allowed them to learn from one another, and the course was tailored to their organization’s unique roles, culture, and challenges. Dr. Bessler particularly valued the peer-to-peer training, which brought together leaders with similar challenges. The result? A survey one year later found those who went through training gained confidence in their ability to lead, were more engaged in their work, and improved the way they interacted with others. Now all incoming doctors to Sound Physicians participate in this leadership development program, and they are building strong leaders throughout the organization. Developing Robust Relationship Management Skills Several studies on physician leadership have noted the importance of social awareness, social skills, and the relationship aspects of leadership. Of course, practicing physicians interact with patients, but the interactions tend to be episodic and individually focused, with the doctor clearly in charge. Most physicians have been trained to keep emotion out of the job, and are not comfortable showing vulnerability in the workplace. So their work experience doesn’t adequately prepare them for managing complicated workplace relationships and being seen as authentic leaders. One way to address this gap is to give physician leaders better feedback at all levels. Yet we frequently see that health care organizations are reluctant to give performance reviews, especially to physicians. They are often viewed as professional class and not “staff.” What’s more, physician leaders tend to loath providing feedback to other physicians. A great example of a physician who, through feedback, became a better leader is Dr. James (not his real name), who leads the emergency services department at a major academic medical center. After 20 years of individual clinical experience, he was appointed chair of the department (an MD leader role in our pipeline), where he was faced with a mandate to improve quality, efficiency, and morale in the department. His new role required him to work in new ways with nursing leadership and other clinical departments that interacted with the emergency department. But he soon discovered a culture of silos and finger pointing that made this challenging. Dr. James had already developed some business and leadership skills from taking on administrative and lower-level leadership roles in the five years before he was named department chair. But he needed to work on his influence skills, broaden his strategic perspective, and deepen his ability to lead change. Through 360 degree feedback, he learned that certain elements of his leadership style that had previously been effective were no longer serving him well. In particular, his strong bias for action, when applied to a department chair role, came across as a tendency to move too quickly before sharing the big picture or rationale for key decisions. After getting this feedback, he worked far more effectively with colleagues. He also developed a cross-functional leadership team that gave him input on his strategy and coordinated operational oversight. The end result was a more aligned and collaborative leadership team for the department. Acquiring a Strategic Perspective Many physician leaders who are promoted to lead an entire enterprise or a business segment (level four or five on our pipeline) lack the necessary experience for the job. They aren’t skilled in managing and blending functional and business strategies, portfolio assessment, factoring in short- and long-term tradeoffs, and taking a longer-term strategic approach to decisions. These shortfalls can render such leaders ineffective. Faced with such challenges, Dr. Ronald DePinho resigned in March as CEO of MD Anderson Cancer Center in Houston. In his resignation, he said that the center “needs a new president who will inspire greater unity and a sharp focus on navigating the tectonic changes in healthcare delivery and economics.” His lack of strategic perspective and inability to balance the institution’s financial, business, and clinical demands revealed he wasn’t right for the role. In contrast, consider Dr. Kevin Tabb, CEO of Beth Israel Deaconness, who is known for his ability to think strategically. He was instrumental in forging a merger with Lahey Health, another large Northeastern system. Dr. Tabb has effectively moved through the different levels of leadership, gaining experience through a variety of roles with increasing responsibility and scope, first at GE’s health care technology business and then at Stanford Hospital & Clinics, where he moved up the ranks to chief medical officer before becoming CEO at Beth Israel Deaconness. In following this development path, Dr. Tabb gained the experience and skills he needed to be successful in a broader, more integrated role. A Tall Order We believe every healthcare institution that wants highly effective physician leaders should start building a pipeline to develop physicians at key stages of their career. But we also realize this is no easy task. One way to start is by focusing on the leadership level of greatest need. After diagnosing how current leaders at each level are faring, their organization can zero in on the weakest areas and build stronger skills development programs there. For any program to work, it must gain physicians’ trust. This means it must address issues that matter to them and be grounded in evidence. A good way to design the program is to get an influential group of physicians into a room to discuss the skills they’re interested in developing and involve them in the program’s design. By beginning to build a sustainable program, healthcare institutions can bolster leadership competencies at all levels, in ways that physicians will welcome.
The Zacks Analyst Blog Highlights: Aetna, CareDx, PRA Health Sciences and Diplomat Pharmacy
The evolving healthcare industry presents an attractive buying opportunity for investors.
CVS Health Corp’s proposed purchase of Aetna Inc will change the way many major US corporations buy health coverage for employees and raise new questions over the cost of those benefits, benefit consultants
A deal that was months in the making is finally official, with Aetna's board of directors approving on Sunday the health insurer’s sale to drugstore chain operator CVS Health Corp for approximately $207 per share in cash and stock, in a deal worth $67 billion, multiple news sources reported on Sunday afternoon. The purchase price represents a premium of 29% to where Aetna shares were trading before the WSJ first reported that the two companies were in talks in October. The deal will be this year’s largest corporate acquisition, and in combining one of the nation’s largest pharmacy benefits managers (PBMs) and pharmacy operators with one of its oldest health insurers, will "reshape health care" by bringing a large insurer and a big provider of pharmacy services under one roof. According to the agreed terms of the deal, which will be announced later on Sunday, Aetna shareholders will receive $145 per share in cash and 0.8378 CVS Health shares for each Aetna share. According to Reuters, "Aetna shareholders will own about 22% of the combined company, while CVS shareholders will own the remainder." As part of the acquisition, three Aetna directors, including Aetna’s Chairman and CEO Mark Bertolini, will join CVS’s board of directors. After the deal closes, Aetna will operate as a separate unit run by members of the current management. The acquisition will be financed with a mix of cash and debt. Barclays, Goldman Sachs and Bank of America have committed to provide $49 billion of financing, Bloomberg reported. With Aetna currently employing 49,500 while CVS has 204,000 full and part-time employees, the combined company will boast a quarter million workers, if only for the time being. The deal, which is expected to close in the second half of 2018, will create cost savings of about $750 million, which means tens of thousands of layoffs. Some more on the companies' background: CVS, with annual revenue of $178 billion, is a major pharmacy-benefits manager in addition to its vast collection of drugstores, some of which already have retail clinics. Aetna, with revenue of around $63 billion, is the third-largest U.S. health insurer, providing coverage to around 22.2 million members enrolled in employer, Medicare, Medicaid and other plans. The deal comes as healthcare payers and pharmacies are responding to rapidly changing factors, including Obamacare, rising drug prices "and the threat of competition from online retailers such as Amazon.com", Reuters noted. In fact, as Morgan Stanley pointed out two weeks ago, Amazon's imminent entry into the healthcare sector has been cited as one of the primary catalysts behind the AET/CVS deal: As a reminder, this is how Morgan Stanley summarized the rationale behind the just announced merger: Drug retailers have the most opportunities to adjust their business models and lower cost structures to defend against Amazon. Within the drug supply chain, the threat of Amazon’s entry into drug retail is accelerating vertical integration, and is cited as a driver behind the rumored CVS/Aetna merger. In our view, the combination would diversify profits away from the supply chain, help create a narrow preferred network, and act as a first step in repurposing the retail footprint to create a new healthcare-retail delivery model. If drug retailers don't change this model, we estimate ~10% risk to profits. CVS has also announced free same-day delivery in New York City, proactively preparing for a potential Prime Now entry, in our view. As a result, the deal “feels more defense than offense,” Ana Gupte, an analyst with Leerink Partners LLC, said recently. In Aetna’s case, “I don’t see a path to growth” in its current configuration, she said. “One of the problems with the health-care system is it’s so fragmented and there’s so little coordination,” Bessemer Ventures' Steve Kraus told Bloomberg. “A better vertically integrated less-siloed system is a good thing in my mind.” In this context, Reuters points out that CVS plans to use its low-cost clinics to eventually save more than $1 billion per year on health care costs for Aetna’s roughly 23 million medical members. It adds that a combined insurer and PBM will also likely be better placed to negotiate lower drug prices, and the arrangement could boost sales for CVS’s front-of-store retail business. It's not just imminent layoffs however, as the combined company expects to invest billions in the coming years to add clinics and services, largely financed by diverting funds away from other planned investments. That could eventually cut costs substantially, with the clinics serving as an alternative to more expensive hospital emergency room visits. Meanwhile, deeper collaboration between Aetna’s insurance business and CVS’s PBM division could drive down drug costs by adding clients and boosting the PBM’s leverage with drugmakers. In recent years, independent PBMs have been criticized for keeping drug prices high amid potential conflicts of interest with insurance company clients, because they could potentially keep cost savings from drug negotiations rather than passing them on to patients. Alternatively, PBM margins have been pressured and health insurers have sought to cut costs amid steep prescription drug price rises and requirements to care for even the sickest patients under the Affordable Care Act. * * * Analysts cited by Reuters said the CVS-Aetna deal could prompt other healthcare sector mega-mergers, as rivals scramble to emulate the strategy. It could spur a merger between Walgreens Boots Alliance Inc and Humana Inc, or between Humana and Wal-Mart Stores Inc, Ana Gupte, analyst at Leerink Partners, said recently. On Nov. 30, Express Scripts Holding Co.’s top executive said the company would be open to a deal at the right price, though wasn’t actively looking for one. “We don’t need to sell to be very successful in the future, but we are always open to others who may all of sudden conclude they want what we have,” Express Scripts CEO Tim Wentworth said in an interview. He also mentioned the possibility of partnering with Amazon on a drug distribution arrangement. The deal, and any subsequent follow through, is not without risk of regulatory intervention: last year Aetna tried to buy rival Humana Inc to gain leverage to control costs, but antitrust regulators killed the deal as well as a proposed merger between Anthem and Cigna. Furthermore it is unclear if the DOJ, which recently sued to block the Time Warner-AT&T deal, won't issue another antitrust veto. That could happen if the DOJ shifts its attention to vertical mergers: Although CVS and Aetna’s planned merger does not directly consolidate the health insurance or pharmaceutical industries, the U.S. Department of Justice has been taking a closer look at so-called vertical mergers, where the companies are not direct competitors. Last month, the Justice Department sued to block AT&T Inc’s planned $85.4 billion merger with Time Warner Inc, saying the integration of a content producer with a distributor could reduce consumer choice. Reuters concedes that "the CVS-Aetna deal could attract similar scrutiny if regulators feared it could block Aetna customers from frequenting other pharmacies or contracting with other PBMs" even as four antitrust experts said there is little doubt the deal will be approved, although it might need to meet conditions to convince antitrust enforcers to sign off. It is unclear whether it would be evaluated by the U.S. Federal Trade Commission or the Justice Department but that decision might be made based on which agency is less busy, said Matthew Cantor of law firm Constantine Cannon. “(The companies) want the FTC to get it. The reason that the FTC is better at this point is that the Justice Department has just broken with decades of precedent of how to deal with vertical mergers,” said Cantor, referring to the decision to refuse conduct remedies and file a lawsuit to stop AT&T from buying Time Warner. According to Bloomberg Intelligence's Jennifer Rie, the CVS-Aetna deal antitrust prospects may depend on which U.S. regulator is tasked with reviewing it. The Federal Trade Commission has been less critical of consolidation among companies in adjacent businesses, known as vertical consolidation. The Justice Department, on the other hand, last month sued to block the merger of AT&T Inc. and Time Warner Inc., a vertical deal. Michael Newshel, an analyst at Evercore ISI, said the DOJ effort to block the AT&T-Time Warner deal does raises concerns but a CVS-Aetna deal does have a path forward. Aetna would likely need to divest some or all of its Medicare drug plan business, he said. In addition to regulatory risk, the combination faces substantial challenges, "including the huge operational task of knitting together the companies’ diverse operations so that customer experiences are smooth and seamless. The deal isn’t likely to deliver as many cost-cutting benefits as combinations with more direct overlap, such as Aetna’s scuttled acquisition of Humana, analysts said. CVS will need to keep much of Aetna’s infrastructure since it doesn’t currently provide health insurance." As noted by the WSJ, as part of the deal CVS plans to repurpose portions of its pharmacies so they become community health centers where customers can go to get answers to more questions about their health and coverage and how to manage the cost of it. The pharmacies will have space dedicated to wellness, and provide services for things like vision, hearing and nutrition.
A veteran argues that civilians deserve the same access to coverage and treatment as those who wear the uniform.