Columbia/HCA Healthcare Corp. may be forced to give up on its acquisition of Blue Cross and Blue Shield of Ohio, but the Nashville-based chain isn't likely to stay away from the state or joint ventures with Blues plans.
A Columbia spokeswoman said the company's lawyers and executives were studying the settlement from the Ohio Department of Insurance. It was unclear late last week what the firm would do next or if it would give up on making another run at the plan.
The settlement between the plan and the Ohio insurance department stopped the proposed acquisition, but it technically doesn't bar the two sides from pursuing a different deal.
"We're in the process of evaluating what our rights are under the contract," said spokeswoman Eve Hutcherson.
Wall Street analysts said they expected the deal to fall through and said Columbia is likely to shift gears in Ohio and attempt to contract with large, self-insured employers. The company also will continue to acquire hospitals and other providers.
"I think (Columbia) will probably move on (to other deals)," said John Runningen, an analyst with Atlanta-based Robinson-Humphrey Co. "I think they want to be in Ohio, but they are just going to take a different tack. There are a lot of employers that are self-insured, and they would be a prime target" for joint ventures.
Iris Shaffer, spokeswoman for the national Blue Cross and Blue Shield Association, said the association hopes the failure of this deal will not discourage other Blues plans from transactions with Columbia.
"Our CEO and others have stated clearly that our issue is not with Columbia; our issue is with the structure of the deal and with the Cleveland company (Blue Cross and Blue Shield of Ohio)," Shaffer said. "The member plans are heavily involved in integrated delivery and joint ventures with hospitals. As long as those transactions meet with our membership standards, we are all for it."
Unlike most other deals Columbia cuts, analysts weren't enamored with its Blues venture from the start. They often called it "Humana 101," referring to the Louisville, Ky.-based firm's ill-fated attempt to operate a hospital chain and launch HMOs simultaneously a decade ago.
"The investment community was questioning the transaction from the beginning," said Peter Costa, an analyst with the Boston office of Chicago Corp. "This is an isolated transaction. It's unfortunate, but it's not something that will harm them."
The termination of the Blues deal isn't expected to affect Columbia's proposed acquisition of Value Health, which is expected to close by July 1 (March 3, p. 38). Avon, Conn.-based Value Health is a benefits management company.