Blue Shield of California, which scuttled a proposed merger with UniHealth in 1993, is in discussions with the Burbank, Calif.-based system about acquiring its CareAmerica HMO.
That failed merger would have been one of the first consolidations between a health insurer and a multihospital system.
A UniHealth spokeswoman would confirm only that the company is "in serious discussions with one party concerning the possible sale or divestiture by UniHealth of CareAmerica. Dialogue is continuing in a positive manner, but it's premature to make any assumptions on the eventual outcome of this process."
Blue Shield spokespeople also refused to confirm the story. But a source close to the companies said Blue Shield is CareAmerica's suitor.
The combination would be a good fit, since both companies are not-for-profit and Blue Shield executives say they want to maintain that status.
In February, MODERN HEALTHCARE disclosed that UniHealth was the latest integrated delivery system seeking to divest itself of its health plan (Feb. 10, p. 3).
The source said of Blue Shield, "I assume their interest in CareAmerica is its Medicare book of business-comprising 42,000 enrollees-and small-to-medium commercial HMO business. Blue Shield's historic strength has been in PPO and indemnity, so on paper it's a real good fit."
In the summer of 1993, San Francisco-based Blue Shield and UniHealth unveiled plans to join forces in a merger establishing a $6.5 billion managed-care company covering 3 million lives.
The deal was called off for reasons that remain "pretty unclear," the source said.
The parties cited "unreasonable differences" when they ceased negotiations in October 1993. At that time, executives declined to discuss the details of the problems. Both companies said at the time they would continue to pursue "other strategic opportunities to work together, short of a merger."
In the four years that have passed since Blue Shield and UniHealth called off their proposed merger, Blue Shield's top management has "gone through a total change," the source pointed out.
Last June Blue Shield became the first HMO in the state to allow its enrollees to visit specialists within their medical group or independent practice association without a referral from their primary-care physician. Other plans later followed with their own versions of that product.