Blue Cross and Blue Shield of Ohio agreed late last week to sell most of its operations to a new company owned by Columbia/HCA Healthcare Corp. for $299.5 million.The deal marks the first time a Blues plan has entered into such an arrangement and is Columbia's first major partnership with an insurer, according to Blues and Columbia officials.The Blues, currently Ohio's largest insurer with 1.5 million subscribers and $2 billion in annual premiums, will continue to provide reinsurance and guarantee all policies written by the new company.All but 50,000 of the subscribers will be transferred to the new company.The deal immediately will expand the number of Columbia-affiliated hospitals in Ohio to nine from three. It also could give the world's largest hospital company clout to bring other Ohio hospitals into its fold.Columbia will assume from the Ohio Blues a majority of board seats of West Virginia's largest insurer, Mountain State Blue Cross and Blue Shield of West Virginia. Columbia has six hospitals in that state.Columbia also will assume the Ohio Blues' interest in a managed-care joint venture with four-hospital Meridia Health System of Cleveland, which includes a 15-year contract to manage that system. Continued on p. 14Blues Continued from p. 3In addition, Columbia will be responsible for the Ohio Blues' affiliations with 254-bed Saint Luke's Medical Center in Cleveland and 259-bed Riverside Hospital in Toledo.In a 50-50 joint venture with Sisters of Charity of St. Augustine Health System, Columbia now operates three northern Ohio hospitals: 266-bed St. Vincent Charity Hospital in Cleveland, 183-bed St. John West Shore Hospital in Westlake, and 416-bed Timken Mercy Medical Center in Canton. Columbia also owns a surgery center and a diagnostic center in Middleburg Heights, Ohio.Kent Clapp, the Ohio Blues' current president and chief operating officer, will serve as CEO of the new Columbia company.A statement issued by the Cleveland-based Blues and Columbia sought to differentiate the deal from controversial moves by Blues plans in other states to convert to for-profit status."BCBSO is not converting to for-profit status; what's unique here is that BCBSO would be the first (Blues) plan to enter into an acquisition and a joint venture arrangement with a non-Blue entity," the statement said.William Silverman, an Ohio Blues spokesman, said the Ohio plan, as a mutual company owned by policyholders, has always paid taxes."The policyholders own the company and they own the assets, and we're not about to be giving away their assets to some foundation," Silverman said.The deal requires approval by the Ohio Department of Insurance and by Blues policyholders. It is expected to be completed by year-end.-
THE WEEK IN HEALTHCARE;COLUMBIA TO BUY OHIO BLUES FOR $299.5 MILLION
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