Blue Cross and Blue Shield of Tennessee, based in Chattanooga, will merge with Blue Cross and Blue Shield of Memphis Jan. 1, creating a $2.1 billion company.
The merger, which has been approved by both companies' boards, will join two plans that have operated separately for almost 48 years. The merger "makes good economic sense for both companies and for Tennessee consumers. This new company will have more capital and more managed-care capability," said Tom Kinser, president and chief executive officer of Blue Cross of Tennessee, in a written statement. The Memphis plan covers a much smaller territory but enrolls almost as many people in its HMO-47,000-as the 50,000 in the larger Chattanooga plan's HMO, a Blue Cross of Tennessee spokesman said.
Blue Cross of Tennessee covers nearly 1.9 million people statewide and Blue Cross of Memphis covers about 260,000 in western Tennessee.
With the merger, the Chattanooga plan also gains a life insurance company-Golden Security Life Insurance-an affiliate of the Memphis plan.
Kinser, former executive vice president of the national Blue Cross and Blue Shield Association, will head the new company. Gene Holcomb, president and CEO of Blue Cross of Memphis, will be second in command.
The companies paid more than $4.3 billion in benefits in 1994. The Memphis plan employs about 500, and the larger Blues employs about 2,700.