In an
era of U.S. health care consolidation, what two major Blues insurers describe
as their “strategic affiliation,” announced March 12, would bring together
dominant regional not-for-profits with combined net revenue of $16 billion and
more than 6 million covered lives. Industry experts tell AIS Health this deal
between Cambia Health Solutions and Blue Cross and Blue Shield of North
Carolina to create a stronger presence could start the ball rolling, possibly
serving as a model for more strategic partnerships among Blues organizations.
“I wouldn’t be
surprised to see more combinations, more consolidation among Blues because I
think many insurers, not just Blues, are looking to grow and gain economies of
scale and efficiencies,” says attorney David Kaufman, a partner at Laurus Law
Group LLC and former general counsel of Blue Cross Blue Shield of Illinois, a
unit of Health Care Service Corp.
The two
Blues organizations are quick to point out the parameters of their deal, which
insurance regulators still must approve. It would involve merged operations and
administrative functions, but their respective health plans and provider
networks would continue to operate independently.
“Now that we’re getting
into this next wave, consolidations as we know them are different,” says Ashraf
Shehata, a principal in KPMG’s health care life sciences advisory practice and
the firm’s Global Healthcare Center of Excellence. Instead of jumping into a
merger directly, plans are testing the water first with strategic affiliations,
he says.
Shehata
says strategic affiliations work differently from mergers. Mergers operate by
identifying where the two merging organizations have duplicate functions, and
combining those functions, he says, but a strategic integration starts by
identifying areas of synergy, while “you defer the merger talk until later.”
From Health Plan Weekly
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