Healthcare Business News

CHI eyes Medicare Advantage growth

By Melanie Evans
Posted: April 5, 2014 - 12:01 am ET

As part of its expansion into insurance, Catholic Health Initiatives has announced a deal for QualChoice Holdings, Arkansas' second-largest HMO. Terms of the deal were not disclosed and must be approved by the Arkansas Insurance Department.

Under terms of the deal, CHI would buy out QualChoice owners TriZetto Corp.; the University of Arkansas for Medical Sciences; Tenet HealthSystem Medical; Arkansas Children's Hospital, Little Rock; and QualChoice of Arkansas.

CHI's Little Rock-based subsidiary, St. Vincent Health System, is also an existing owner in QualChoice.

The purchase would extend CHI's reach in the health insurance market, which the Englewood, Colo.-based system cemented last year with the $24 million acquisition of Soundpath Health, a Federal Way, Wash.-based Medicare Advantage provider that insures 17,000 individuals.

Little Rock, Ark.-based QualChoice, which operates across Arkansas and whose health plans cover 70,000, is likely to enter the Medicare Advantage market, said Michael Stock, CEO and president of QualChoice.

The Medicare Advatage market is one that CHI's Michael Rowan described during a recent interview as “a low-risk means of getting into the insurance business.”

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Rowan, the system's president and chief operating officer, said CHI officials were in talks to acquire other Advantage plans as part of a national expansion of the system's insurance assets.

“Our goal is not so much to buy a Medicare Advantage program for a specific market, but to bring in the skill sets and the infrastructure to use across all of our markets,” he said.

QualChoice likely will serve as the backbone of the health system's national insurance expansion, Stock said. CHI currently operates across 18 states with a growing number of hospitals, now totaling 89 facilities, after a series of recent deals, including acquisitions of St. Luke's Health System in Houston and deals in Nebraska and Washington.

Its rapid expansion and recent physician hiring are part of the system's push to enter into contracts with insurers or directly with employers that offer financial incentives to improve overall population health, Rowan said.

Contracting directly with employers could potentially put the health system in competition with existing health insurance companies, Rowan said.

“There may be opportunities where we recognize that there are certain skill sets that make sense that the payers have. We could work in partnership with them,” he said.

As early as next year, the health system may offer insurance plans developed with QualChoice in markets outside of Arkansas, Juan Serrano, CHI's senior vice president of payer strategy and operations, said.

Follow Melanie Evans on Twitter: @MHmevans

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