Amid an industry landscape where the largest insurers have spent years diversifying their portfolios, one regional payer is betting that the current wave of financial disruption is presenting an opportunity to grow.
WPS Health Solutions, an 80-year-old nonprofit insurer headquartered in Madison, Wis., is full steam ahead on an acquisition-driven growth strategy targeting companies at a funding inflection point. The goal? Assemble a portfolio of diversified businesses outside its core operations as a regional employer plan and third-party administrator for federal contracts.
“With all the pressures facing the healthcare system – Medicare Advantage, Medicaid, the individual market – some companies are being placed into a very reactive position and are being forced to consolidate or sell,” Rochelle Myers, WPS’s chief growth officer, told Becker’s. “But if you’re not, you can find partnerships or you have the capital to invest and to diversify. I call those no-regret moves.”
WPS’s first deal closed in June, when the company acquired Mavida Health, a digital mental health company focused on women navigating the reproductive life cycle, from fertility and pregnancy through postpartum depression and menopause. Mavida operates in California, New York, New Jersey and Texas and was approaching a Series A round when WPS stepped in as a strategic buyer.
“There is such a gap in access to mental health resources, and especially resources like this that are specialized in the women’s health area,” Ms. Myers said. “We care about growth, but we also care about doing this in a way where we can serve our existing customers, bring on new customers, generate value over time, and give these co-founders the space and the time to continue to grow the business.”
Ms. Myers, who now also serves as president of Mavida, said she envisions future acquisitions reinforcing one another through cross-selling, shared product development and channel partnerships.
“Our fundamental thesis is that digital health across many different fronts is going to play a core role in both transforming and creating a new type of chassis that hopefully delivers healthcare that is affordable, sustainable, and higher quality,” she said.
Looking forward, WPS has identified five growth domains it plans to pursue through acquisitions and partnerships, including women’s health, mental health, caregiving, aging in place, and “payer insurtech,” a category that includes capabilities like cost containment, payment integrity and care navigation that could be sold to other health plans.
The strategy stands in contrast with the financial pressures facing many of WPS’s peers across the country, where small portfolios and rising medical costs have spurred a wave of consolidation in recent years.
For Mavida, the near-term focus is deeper market penetration in its four current states, with a national expansion strategy underway. WPS also plans to bring the platform into Wisconsin and leverage its payer contracting relationships, consumer research and capital to accelerate the company’s growth.
“The interplay between physical health and mental health is one that’s been underestimated,” Ms. Myers said. “As we’re serving women, it’s really understanding where they are physically, the journey they’re on, what they’re facing, and then really understanding from a mental health perspective how these two things fit together and how we can help them.”
At the Becker's 5th Annual Fall Payer Issues Roundtable, taking place November 2–3 in Chicago, payer executives and healthcare leaders will come together to discuss value-based care, regulatory changes, cost management strategies and innovations shaping the future of payer-provider collaboration. Apply for complimentary registration now.
