Today, sweeping consolidations do not define payer M&A. Instead, discipline, precision and — in the nonprofit world — the right partner all take precedence.
Becker’s spoke with Deblina Ghosh, a principal focused on health at consulting firm EY-Parthenon, about the trends she is observing and what health plans need to know as they navigate the M&A landscape. The big theme: “surgical portfolio moves.”
“Historically, we have seen payers start with horizontal scale first, like adding members, markets and improving their negotiating leverage overall. Then it moved toward vertical integration. You saw a lot of PBM, care delivery, home health and any of the services around the premium dollar that the member is paying,” she said. “Right now, what you see is an era of optimization and discipline. They are very deliberate on where they put their capital and they are very focused on answering the question of, ‘Where do I have the right to win?’”
Ms. Ghosh broke down several ways insurers are approaching M&A:
1. The precision focus of large national payers
Think: Insurers are reallocating capital and sharpening their focus, resulting in divestitures and buying assets for specific capabilities.
Example: Cigna closed the sale of its Medicare Advantage business to Health Care Service Corp. in 2025.
2. Partnerships among smaller plans
Think: Health plans could face steeper fixed costs or want additional resources. While for-profits may need to make “a cleaner buy-sell decision around return and strategic fit,” nonprofits are leaning into affiliations to maintain their priorities.
Example: Nonprofit insurers Blue Cross and Blue Shield of Kansas City (Mo.) and Highmark secured approval for their affiliation earlier this year.
3. Health system-owned plans under pressure
Think: Payviders are in the unique position to own an insured person’s journey as both a patient and a member. While that thesis may make sense, the execution can sometimes miss the mark.
Example: Providence Health Plan, under Renton, Wash.-based health system Providence, will close most of its business starting in 2027. It seeks to transfer its Medicaid and Medicare supplement products to other organizations. As of May, the system said it is in talks with an insurer to “potentially operate” its Medicare Advantage business.
4. Services and capabilities take center stage
Think: Health insurers — and sometimes even private equity players — are getting their hands on third-party administrators and other assets to bolster portfolios and support future strategies. These moves do not generally stem from a place of distress.
Example: Horizon Blue Cross Blue Shield of New Jersey plans to launch employer solutions through its recently purchased TPA, HealthEZ. Since TPAs focus on administration, the insurer does not face the same risk it would have had it assumed another traditional payer organization, Ms. Ghosh said.
A case study
Circling back to Blue KC and Highmark’s affiliation, Mark Nave, Highmark Health’s senior vice president for strategic growth initiatives and integration, and Barb Cross, Blue KC’s vice president for products and strategy, first led the affiliation and are now steering the integration.
“Frankly, as we think about headwinds of national competitors, the cost of healthcare [and] provider consolidation, it’s almost mandatory that we continue to grow as a health plan to continue to be competitive and serve our members and our clients better,” Mr. Nave told Becker’s.
In 2024, Blue KC initiated its search for a partner to help boost efficiency, upscale technology and product capabilities, and encourage affordability. The insurer reviewed more than 20 other Blues plans in the process.
Blue KC ultimately landed on Highmark, prioritizing a continued community commitment, cultural fit and tech capabilities, Ms. Cross said. The insurers announced their affiliation in December 2025 and have since gained regulatory approval. But that’s just the beginning.
The timing of tech integration
Mr. Nave said 2026 is a planning year for early building, 2027 will be a building year while tech migration begins, and 2028 is when the full transition to Highmark’s technology starts to solidify. Ms. Ghosh said this timeline is the norm, with deals baking in integration phases that last roughly three years. She said that early on, the integration should focus on “protecting the basics,” such as claims payment and anything externally facing.
As challenges with tech integration arise, Ms. Ghosh said there are common culprits.
“The breakdown is rarely the platform. It is really the data quality that’s coming. It’s the workflow redesign and the operational readiness,” Ms. Ghosh said.
The affiliation with Blue KC isn’t Highmark’s first rodeo. Highmark was born out of an affiliation between Pennsylvania payers, with Blues plans in other markets joining over the years.
“We’ve done it before, and we have a playbook and a roadmap that we’re following to execute that,” Mr. Nave said.
The people problem
Beyond the tech transition, getting people on board can be another challenge.
“People don’t actually react to change. They react to uncertainty about what their role is in that change,” Ms. Ghosh said. “They often leave when there is no clarity.”
Even though Blue KC is maintaining its branding and local leadership, staff concerns have emerged.
“I’d be lying if I said that I fully anticipated what it would feel like to support employees through this type of change,” Ms. Cross said. “They are themselves very, very committed to serving our community here. … Change is scary for them, not just from a personal standpoint, but from a professional and a community-facing standpoint.”
She said everyone in the organization is at a different stage of navigating the transition.
Regulatory considerations are no longer an afterthought
Regulatory scrutiny has also shaped asset selection, Ms. Ghosh said. Much like today’s broader understanding that tech integration could take years, regulatory concerns are considered proactively, not reactively.
“Previously, it was treated as, ‘Let’s find the synergies and then we will defend it later if there is regulatory scrutiny.’ In the new era — and the new playbook around diligence and M&A — it is, ‘Let’s build the regulatory case along with the financial and the strategic case,’ so it is a very integral part of the overall deal thesis,” she said.
Ms. Ghosh said her team encourages clients to build a regulatory case accounting for several “what-if” scenarios. She said consultants can help navigate privileged data that one party may not have access to and run antitrust diligence.
What other leaders need to know
Ms. Ghosh said, in her experience, leaders often wish they “create more clarity before close,” and they often underestimate communication.
Larger organizations likely also have something to learn from their smaller partner, Mr. Nave said.
“A difference in scale doesn’t mean you have a monopoly on information and knowledge and ways of doing things,” he said. “There might be someone across the screen or across the table that’s actually cracked a pretty tough problem a long time ago, and you can learn from them.”
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