Days after Centene Corporation (NYSE: CNC) announced its plan to acquire Magellan Health (Nasdaq: MGLN), leadership is doubling down on the insurer’s commitment to behavioral. Those services will play an important role in the company’s future, according to Centene CEO Michael Neidorff, who is also president and chairman of the company.
“It has to be integrated,” Neidorff said. “If I have a newly diagnosed diabetic, I want the case manager … as they leave the endocrinologist’s office to say, ‘I think you should go see a psychologist to help you understand how to deal with this.’ You’re going to end up with a higher quality outcome when you do that, and the highest quality is the lowest cost, shorter and longer term.”
Neidorff made those comments Jan. 11 during a virtual presentation at the annual JP Morgan Healthcare Conference, where he stressed the insurer’s focus on holistic care and how the Magellan deal comes into play.
Centene Corporation (NYSE: CNC) is a multi-line health insurance company that’s oriented toward government-sponsored programs. The company has a total health enrollment of more than 22 million people and more than $110 billion in revenues from 2020.
Meanwhile, Magellan Health provides behavioral health services, employee assistance program offerings, specialty health and care management to various health care coverage providers.
Earlier this month, Centene announced that it had entered into a definitive agreement to buy Magellan for $2.2 billion. The transaction is expected to close in the second half of the year and form one of the nation’s largest behavioral health platforms.
“Our aim … with this combination is to deliver improved health outcomes at lower total medical costs through the better integration of behavioral health capabilities and physical health services,” Neidorff told conference attendees.
While the deal is new, Centene’s interest in behavioral is not. Neidorff said the organization had been looking at behavioral options for “a long time.” And ultimately, Magellan ended up being the right fit.
“Magellan has a very effective, large network,” Neidorff said. “That’s being combined with some virtual capabilities in behavioral health, and clearly it’s a growing segment. There’s a need for that integration, and they give us that capability now.”
Integration between behavioral and medical care isn’t just a theme for Centene, but a necessary one becoming more popular within the health care industry at large.
Amid COVID-19, the prevalence of mental health and substance use issues has spiked. Plus, studies continue to show that treating behavioral issues improves health outcomes while reducing overall costs.
Centene’s acquisition of Magellan comes following similar transactions in years past, where payers purchased specialty businesses to build out more complete portfolios. In fact, the deal comes less than a year after Anthem (NYSE: ANTM) completed its purchase of Beacon Health Options, a competitor of Magellan.