With the addition of Blue Cross and Blue Shield of Connecticut, Anthem, an Indianapolis-based insurer, fleshes out its fledgling East Coast operation.
The North Haven, Conn.-based Blues plan said last week its board of directors had agreed in principle to merge with Anthem, pending approval by Anthem's board, which was to vote on the deal late last week. The merger also requires approval by the insurance commissioners of Connecticut and Indiana and policyholders of both companies.
Both are mutual insurance companies, meaning each is owned and directed by its policyholders.
In May, Anthem announced a merger agreement with Blue Cross and Blue Shield of New Jersey (June 3, p. 3), which is acquiring the assets of Blue Cross and Blue Shield of Delaware in a deal that's expected to close by Dec. 31. Anthem expects to complete the New Jersey merger late this year or early in 1997, followed by the Connecticut deal, resulting in a company with 1996 revenues of $11.5 billion.
If the latest combination is approved, the Connecticut Blues, which covers 85,000 residents and had 1995 revenues of $1.5 billion, will become part of Anthem East, a Newark, N.J.-based holding company that will serve as Anthem's East Coast center of operations. John F. Croweak, chairman and chief executive officer of the Blues plan, will serve as Anthem East's chairman and CEO.
Anthem appears to be circling its wagons around New York, but the strategy is broader than that, said Jim Parker, Anthem's vice president of external relations and corporate marketing. Anthem continues to talk with a number of potential merger partners, he said.
"Our strategy is to create enough of a critical mass in one region of the country-in this case, the East Coast-that we can apply the efficiencies and amass all of the back-room support it takes to deliver managed-care products across a large population base," he said.
Croweak said the proposed merger is the "most dramatic change" in the plan's 60-year history.
"It is critical that we seize this opportunity if we are to become bigger, stronger, more competitive and better positioned to survive in the rapidly changing world that is healthcare today," he said.
