Anthem inked a "definitive agreement" last week to buy Blue Cross and Blue Shield of Colorado for $200 million, but the agreement allows the Blues plan to consider other offers.
The 445,000-enrollee Colorado plan is unprofitable, but competition ultimately may jack up its price. And Indianapolis-based Anthem seems ready to match or beat any offer.
Anthem upped the ante to $200 million from its original offer of $165 million, made public just three weeks ago. That matched a surprise $200 million offer made by WellPoint Health Networks, the Thousand Oaks, Calif.-based parent corporation of Blue Cross of California.
As many as five health plans, including Anthem and WellPoint, began bidding for the company in January, but none of those initial offers had been made public.
The Blues plan lost $34 million last year on net revenues of $443 million.
Anthem already operates licensed Blues plans in Connecticut, Indiana, Kentucky and Ohio and recently agreed to acquire the Blues plan in New Hampshire.
The winner of the bidding war, whether it's Anthem, WellPoint or another insurer, would gain a leading position in a fragmented Colorado managed-care market.
With about 17% of the market, the Colorado Blues has said it is the state's largest insurer. And its affiliated plan, Blue Cross and Blue Shield of Nevada, covers an additional 55,000 enrollees.
The Blues deal is but one of several WellPoint is pursuing as it stakes its claim in Colorado. Last month it agreed to buy Foundation Health Systems' 100,000-enrollee QualMed Plans of Colorado (March 15, p. 16), and it doesn't plan to stop there.
Anthem downplayed the fact that the Colorado plan is considering other offers. The plan's parent, Rocky Mountain Health and Medical Services, said in a written statement that the March 29 agreement with Anthem "protects Colorado's interests by recognizing that the company may receive competing offers."
Anthem spokesman Don Stengele said the statement was unusual given the "definitive" agreement, but he argued that the Colorado Blues simply is trying to be "as open and aboveboard and honest as it possibly can," given the controversy over its attempted conversion to for-profit status in 1997. Plans to convert the Blues plan were scrapped last year when the decision was made to sell the company.