BJC HealthCare is anxious to get out of the managed-care business, but the planned sale of its HMO in a highly consolidated St. Louis health insurance market will face antitrust scrutiny.
BJC, a 13-hospital not-for-profit system, and Washington University School of Medicine, an affiliate of BJC's member hospitals, announced last week that they had agreed to sell the commercial HMO portion of their Health Partners of the Midwest plan to Group Health Plan for $4.5 million.
GHP is a subsidiary of investor-owned Coventry Health Care, based in Bethesda, Md.
GHP already operates a 191,000-enrollee HMO in the St. Louis market, the second-largest HMO in the metropolitan area, according to 1999 Missouri Department of Insurance data. Health Partners, the bulk of which GHP is acquiring, ranks third in the market with 98,000 enrollees.
"We are going to have a rigorous review," said Randy McConnell, spokesman for the Missouri Department of Insurance, which must approve the sale.
The review will consider if the market concentration resulting from the sale would hurt consumers in terms of price or quality of service.
The hospitals that later formed BJC joined together to launch Health Partners in 1988 through a venture with Washington University School of Medicine. Health Partners has 53,571 commercial and 5,179 Medicaid members.
Last year, Health Partners lost $14.5 million on premium revenue of $164.5 million, according to the insurance department. That was the last straw for the HMO's provider owners.
"We acknowledge that this is not a business we are excelling at," said BJC spokeswoman Kim Kitson.
The BJC system reported an operating loss of $70.6 million on $1.9 billion in revenue for the fiscal year ended Dec. 31, 1999.
"The sale of Health Partners' commercial business ensures that BJC and Washington University School of Medicine can concentrate all of our energies and resources on what we do best--taking care of people," said Steven Lipstein, BJC president and CEO, in a written statement. Lipstein replaced Fred Brown, who retired at the end of 1998.
Care Partners, the Medicaid HMO division of Health Partners, operates independently and will not be affected by the sale.
Dale Wolf, Coventry chief financial officer, predicted that Health Partners would be profitable six to 24 months after the sale.
BJC said it hopes to complete the sale by Jan. 1, 2001.