Hoping to help its members respond to recent mergers among large for-profit managed-care companies, the Blue Cross and Blue Shield Association says it will arrange the purchase of plans for its members. The members then would break up the acquired company based on geographic location.
Patrick Hays, president of the 55-member national association based in Chicago, would act as the middleman in the transactions, performing pre-acquisition reviews and negotiating. The purchasers would be individual Blues plans or consortiums of Blues plans. The number of Blues plans in each deal would be dictated by the size and geographic location of the plans being acquired.
Hays added that the national association would scout possible deals but also would broker transactions brought to it by member plans.
The association recently looked at "one (HMO purchase) that would have been huge" and even went so far as to perform the pre-acquisition due diligence review, Hays said. However, the plans involved abandoned the transaction after the review. Hays would not disclose which plan the Blues' members had considered acquiring or why the deal fell through.
As a result of recent managed-care consolidation, such as last month's proposed acquisition of Humana by United HealthCare Corp., Hays said Blues plans "are learning that you have to have scale in order to compete."
Hays likened the Blues' efforts to the recent purchase of 22 Columbia/HCA Healthcare Corp. hospitals by a consortium of eight not-for-profit hospital systems. The Blues would consider purchasing for-profit and not-for-profit plans, Hays added.
The Blues association is devoting one person to the acquisition project but will allocate more resources as needed, Hays said.
"It has to be a book of business that makes sense for us," Hays said. "It has to make us demonstrably better or add to our presence somewhere."