Wellpoint is continuing to consolidate its hold on the nation’s Blues plans with its recent announcement regarding the pending deal to acquire Wellchoice, the holding company that owns New York’s Empire Blue Cross and Blue Shield.
The transaction is valued at $6.5 billion in cash and stock, is scheduled to close in the first quarter of 2006, subject to regulatory approvals.
This continues the trend towards consolidation in the industry, following such notable deals as Coventry-First Health, United-Oxford, United-Pacificare, Anthem-Wellpoint and Aetna-HMS.
According to California HealthLine;
“The (Wall Street) Journal reports that slowed membership increases, large premium increases becoming less common and the fact that size helps insurers negotiate rates with providers has contributed to the trend of consolidation in the insurance industry (Martinez, Wall Street Journal, 9/28). Gary Claxton, a Kaiser Family Foundation vice president and director of the Health Care Marketplace Project, said, “If you want to grow, you have to look at new markets or consolidation.” He said that insurers have been unable to grow by adding new employers or members, so consolidation is their only option.”
Claxton’s comments echo earlier statements here. With Wall Street’s insatiable thirst for growth and continuously improving quarters, health plan execs are desparately seeking new business. There are now 13 remaining publicly traded health plans, and speculation is rampant that the smaller will continue to be acquired by the larger as health care Pac-Man continues. Coventry may be next on the list.
What does this mean for you?
Opportunities for speculation in stocks. Fewer choices in health plans. Confusion regarding who owns which health plan.
Sep
30
