Highmark Moves to Absorb Leading Western New York Insurer HealthNow

by Leslie Small

In a deal that the companies say was validated by the challenges of the COVID-19 pandemic, HealthNow New York Inc. revealed on June 16 that it will become part of fellow Blue Cross Blue Shield licensee Highmark Inc.

HealthNow, which is headquartered in Buffalo, N.Y., currently operates Blues-licensed health plans in eight counties in western New York and 13 counties in northeastern New York. Pittsburgh-based Highmark operates Blues plans in Delaware, Pennsylvania and West Virginia. Once their combination is completed, the organizations will serve 4.4 million members, according to AIS's Directory of Health Plans.

"This makes a lot of sense, really, for both organizations," says Dan Mendelson, founder of Avalere Health. "For Highmark, it's a strategic entry in New York, and it's a plan of scale — and they're in the business of building scale."

For HealthNow, Mendelson says, scale is also the motivator. "For these regional players…it's hard to be a 'big small player.' What that means is when things happen — and COVID-19 is an important example where you need to leverage scale to solve problems regionally — you don’t have that kind of air coverage you get from being part of a large organization," he says. "And so, I think a lot of the regional players are starting to understand the benefits that come with an affiliation with a larger player."

Not everyone, though, is convinced of the benefits of scale. "Highmark and HealthNow New York coming together in the name of delivering additional value to beneficiaries is commendable, however, they and all other health care players should be wary of using scale to achieve this goal," says Rita Numerof, Ph.D., co-founder and president of Numerof & Associates. The notion that "bigger equals better," she adds, "is a widely held misconception, as size can often get in the way of innovation and rapid adaptations to change."

"In order for this affiliation to be successful, Highmark and HealthNow New York will need to make an early and steadfast commitment to operating in tandem with one another," Numerof continues. "Their path forward will need to be abundantly clear, their mission and values in total alignment, and beneficiary value at the heart of every effort."

The deal still must obtain regulatory approvals and meet certain closing conditions before it is completed.

From Health Plan Weekly