As a growing number of companies migrate to self-funded health plans in order to save costs and gain greater control over their healthcare benefits, they turn to Third Party Administrators (TPAs) that possess the expertise and capabilities to effectively implement and manage their plans. Given the critical role they play, TPAs that have differentiated themselves through their scale, tech-enabled solutions, cost containment strategies, and ability to improve clinical outcomes have garnered significant interest from private equity and strategic buyers alike. The level of competition for and valuations ascribed to attractive TPA assets has been increasing and is a trend that is expected to persist as the highly fragmented TPA market continues to consolidate.

In this brief we discuss:

• The secular trends driving the broad adoption of self-funded plans and characteristics of the TPA industry
• The unique services and offerings that TPAs deliver to their customers
• Key differentiators that drive buyers’ interest in TPA assets
• Cornerstones of the TPA investment thesis

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