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My Take On Anthem-Cigna, Big Dumb Companies and the Executives Who Run Them

After last Friday's Appeals Court decision, Anthem's hostile takeover of, er, merger with Cigna has but a faint pulse. Good. Unplug the respirator. Cigna's figured it out but Anthem is like that late-late horror show where the corpse refuses to die. Meanwhile, 150 McKinsey consultants are on standby for post-merger "integration" support. I guess "no deal, no paycheck..." is powerfully motivating to keep the patient alive a while longer.

In court, Anthem argued that assembling a $54 billion behemoth is a necessary precondition to sparking all manner of wondrous innovations and delivering $2.4 billion in efficiencies. The basic argument appears to be "We need to double in size to grow a brain. And just imagine all those savings translating directly into lower premiums for employers and consumers." 

Stop. Read that paragraph again. Ignore the dubious "lower premiums" argument and focus on the deal's savings.

$2.4 billion saved from a projected-$54 billion company - less than 5% by my admittedly non-McKinsey math. An amount that barely covers McKinsey's travel budget yet it's the best Anthem can do to posit any consumer benefit at all.

I may have been born at night, but it wasn't LAST night. The Appeals Court is dead-on: the savings are too little and the promises too tenuous. Moreover, dear Anthem CEO Joe Swedish, if you want to save consumers $2.4 billion JUST DO IT! What's stopping you?

Here's my answer: nothing, except the certainty that running a business is hard and not always glamorous while M&A is sexy, adrenaline-fueled and attention-getting. Run intelligently, either Anthem or Cigna alone ought to be able to carve out $2.4 billion without breaking a sweat or removing filet mignon from executive dining rooms.
Combining two big, dumb companies doesn't make you smarter or leaner. And when has creating an even bigger dumb company ever jump-started innovation? No, I'm asking. I'd really like to know.

Walk into Anthem's boardroom swinging a dead cat and you'll smack major savings opportunities in the face, starting with investment bankers, lawyers and executives looking for a fat payday now that they're grand panjandrums of an even BIGGER company.

Oh wait. I think I see the problem here...


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