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Tailwinds Driving Investment in Payor Services

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Published January 2022

The payor services sector is benefitting from a variety of tailwinds, ranging from regulatory changes to technological improvements. The sector is expected to grow at a CAGR of 24.1% over the next seven years, amounting to total sector revenue of $13.3 billion before 2030. Payor services can be segmented based on the solutions offered, including ancillary benefit management, cost containment, IT services, and medical review. These solutions provide payors with the leverage to grow their topline without exposing their net earnings to increased costs.

Payor services providers have a high potential for growth and a minimal risk profile, driving interest from private equity investors and strategic acquirers, such as healthcare IT companies and payors themselves. Tailwinds driving demand in the sector have led to increased deal flow as shown below; 2021 outpaced the past three years resulting from invested capital and deal volume. Provident believes transaction activity within payor services will continue to accelerate over the next several years.

Whitepaper Summary

  • Introduction
  • Growing Market and Rising Demand for Payor Services
  • Payor Services Solutions Overview
  • Consolidation Drivers within Payor Services Industry
  • M&A Activity in Ancillary Benefit Management
  • M&A Activity in Cost Containment Solutions
  • M&A Activity in IT Services
  • M&A Activity in Medical Review Solutions
  • Payor Services Market Map
  • Deal Spotlight: Magellan Health and Centene Corporation
  • Recent Consolidation in Payor Services
  • Private Equity Platform Investments in Payor Services
  • Private Equity Investment’s Impact on Payor Services
  • Case Study: Change Healthcare
  • Concluding Thoughts
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