2018 marked a year of continued robust healthcare merger and acquisition activity, with deal volume surpassing that of 2017. The dollar volume of healthcare deals also exceeded 2017, highlighted by CVS Health Corp. (NYSE: CVS) surviving regulatory scrutiny and finalizing its purchase of Aetna for $69 billion, and Cigna (NYSE: CI) closing its $67 billion merger with pharmacy benefit manager Express Scripts (Nasdaq: ESRX). Private equity firm KKR & Co. Inc. (NYSE: KKR) acquired Envision Healthcare Corporation (NYSE: EVHC) in a going private transaction for $9.9 billion; and in November, LifePoint Health, Inc. (Nasdaq: LPNT) merged with Apollo Global Management-owned RCCH HealthCare Partners for an estimated $5.6 billion.

Not only do these deals show the energy of the industry, but they also represent a seismic shift in healthcare. Cross-sector transactions, such as the CVS-Aetna and Cigna-Express Scripts transactions, are becoming more frequent and disrupt traditional industry models. By seeking alliances across industry lines, healthcare companies aim both to reduce costs and improve care coordination as well as realign incentives to better meet consumer demands. As providers fight to stay profitable in the wake of value-based reimbursement, these cross-sector combinations may foreshadow the future of the healthcare industry.