Centene Corp.’s pursuit of WellCare Health Plans would cement the company’s position atop the Medicaid managed-care market. But the heart of the deal—and the real benefit to Centene—is the addition of Tampa, Fla.-based WellCare’s hundreds of thousands of Medicare Advantage members. Adding them to the portfolio would propel Centene into the fastest-growing segment of the industry, which shows no signs of slowing as baby boomers rapidly age into the program.
St. Louis-based Centene announced its proposed $17.3 billion takeover of WellCare March 27.
With nearly every health insurer throwing elbows to capture a piece of the lucrative but crowded Medicare Advantage pie, Centene needs WellCare’s help in establishing itself in the space. Going it alone would be a heavy lift.
“To grow (Medicare Advantage membership) organically, they’d be starting from a standstill,” said David Windley, managing director at investment firm Jefferies. “Stapling on a WellCare group that has critical mass in Medicare Advantage in markets where Centene doesn’t gives them a more legitimate platform to grow from.”