Blue Cross and Blue Shield plan Highmark Health said it will expand into western and northeastern New York via an “affiliation agreement” with HealthNow New York in a major consolidation of health insurance plans in the northeastern U.S.
The deal announced Tuesday combines the operations of two Blue Cross Blue Shield health insurance companies and extends the Highmark brand into HealthNow’s “8-county Western New York and 13-county Northeastern New York service areas,” the insurers said Tuesday. Already, Highmark has more than 5.6 million health plan enrollees in Pennsylvania, Delaware, and West Virginia and that health plan membership will grow to 6 million once the deal closes, executives said.
The arrangement, which the companies are describing as an “affiliation,” means Highmark Health will become the primary licensee of the Blue Cross and Blue Shield Association in HealthNow’s services areas.
Financial terms weren’t disclosed for the deal, which still needs state and federal regulatory approvals, the companies involved said Tuesday. A Highmark spokesman said “no consideration will be paid and no assets will change hands” unlike mergers involving publicly-traded, investor-owned companies.
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Still, the deal continues the ongoing consolidation in the healthcare industry, particularly among health insurance companies that pay doctors and hospitals to provide medical care.
CVS Health two years ago bought the nation’s third largest health insurer in Aetna while the health insurer Cigna bought the big pharmacy benefit manager Express Scripts. Other deals are said to be in the works among Blue Cross and Blue Shield plans, which see the need to consolidate to compete with CVS, Cigna, UnitedHealth Group and Humana.
HealthNow chief executive officer David Anderson described the arrangement as “good for the people and communities we serve.”
HealthNow, which will be branded “Highmark Blue Cross Blue Shield of Western New York and Highmark Blue Shield of Northeastern New York,” said it will keep its headquarters in Erie County in New York and its “regional office in Northeastern New York/Albany County, New York.”
“Highmark has a unique business model, organized around the principles of partnership between payers and providers,” Anderson said. “In addition, Highmark has been a leader among the Blues and in the broader industry in developing new capabilities and innovative Blue Cross Blue Shield products from which our members and customers will benefit.”
Highmark president Deborah Rice-Johnson said the affiliation “will preserve the strong presence of a not-for-profit Blue organization that is committed to the health and vitality of the local communities it serves.”
Source: Forbes
