Walmart in talks with Humana for ‘partnership’

Bloomberg

Walmart Inc. is in talks with health insurer Humana Inc. for a closer partnership to provide health care to consumers at home and prevent illness, according to a person familiar with the matter.
Health-care spending accounted for about 18 percent of the US economy in 2017, and continues to surge with an aging population, pricey medications, and a complex regime of reimbursements and middlemen. Companies have been trying to address some of the market’s inefficiencies by forging alliances or getting bigger: Cigna Corp. is acquiring Express Scripts Holding Co. for $54 billion, and CVS Health Corp. is buying Aetna Inc. for $68 billion.
Walmart and Humana have explored a wide range of options including a merger, though an outright combination isn’t likely at this point, said the person, who asked not to be identified discussing private information. The Wall Street Journal reported that Walmart was in early talks to acquire Humana.
An acquisition of Humana’s size— $37 billion—would be rare for Walmart, which has mostly been focussed on buying e-commerce companies, including 2017’s deals for Bonobos Inc. and ModCloth. But the company still gets plenty of shoppers in physical stores who rely on its 4,700 pharmacies in the US. Like drugstore chain CVS, Walmart could use a partnership with an insurer, or even a merger, to take on a more powerful role in the delivery of medications to consumers.
Walmart and Humana already work together on prescription drug plans for individuals in the US Medicare
programme. The plans offer some
prescriptions for as little as
$1, as long as customers pick up their drugs at a Walmart or Sam’s Club. Walmart could use a closer tie-up
to steer more of Humana’s customers to its stores through its drug
coverage arrangements. Stores can also be a convenient place for individuals to get care, and both CVS and Walmart have clinics in some locations.
The rising cost of health care has captured the attention of some of corporate America’s biggest titans. Amazon.com Inc., JPMorgan Chase & Co. and Berkshire Hathaway Inc. announced plans earlier this year to set up a business to improve their employees’ care.
Berkshire Chairman Warren Buffett called high health costs a “tapeworm” afflicting the US economy.
Walmart has been testing its new plans, known as accountable-care organizations, or ACOs, for two years.