Did the Next Big Thing in Healthcare Just Die?

The most exciting recent development to appear in our As-a-Service universe was the announced deal between Health Net, a California health insurance payer, and Cognizant, the large ITO/BPO/consultancy. Under terms of this transaction, Cognizant was to use its newly acquired TriZetto claims-processing software, to take over the legacy platforms of Health Net. At the same time, Cognizant was to rebadge the Health Net service operations staff, toward an eventual integration of process and software. It was to be a turnkey “claims-as-a-service” offering – all to be sold back to Health Net, by the drink. Elegant, easy-to-predict, easy-to-price, straightforward, and sending both parties back the competencies that are core to them.

All sides were set to win: Health Net could re-capitalize and get to a predicable Op Ex number they could live with, while Cognizant would have a killer anchor tenant for their healthcare claims as-a-service (stealing a march on the entire industry), and presumably Health Net’s customers would experience better, cheaper service.

 There was no more elegant play in the market. It was hard to contain one’s enthusiasm—investment banks and some alert analysts were taking notice. This was a game-changer and validation of the strategic genius and daring of Cognizant. The TriZetto acquisition, a question-mark for some observers, was immediately redeemed, and now seen as prescient. “No further questions,” said the investment bank analysts, scribbling “buy” recommendations.

So imagine the shock and awe produced by the news that this deal has been superseded by a merger, wherein Heath Net has agreed to be acquired by Centene, stranding the game-changing transaction with Cognizant in the process.

Ever the confident and optimistic market player, Cognizant dismissed this as something of a non-event that would in fact have no impact on its guidance to the Street. Nothing to see here, move along.

Fair enough, and we hope so. With this deal dead, where is the encouraging news on the healthcare payer back office rationalization front?

Out of the ashes of this early good idea we are bound to see deals like this emerge, and soon. And when we read the news don’t be surprised if Cognizant or some BPO player equally bold and visionary is in the headline. It is simply too good an idea, whose time must surely come.