WellPoint Health Networks' proposed purchase of the Wisconsin Blues would be a windfall for Wisconsin's two medical schools, which are recipients of almost all of the Blues holding company's stock at a sales price that is more than triple its previous value, medical school officials say.
Pending state approval of the $906 million sale, announced Tuesday, officials at Medical College of Wisconsin in Milwaukee and University of Wisconsin Medical School in Madison say they would split almost all of the proceeds evenly.
Previously, the two schools had expected a total of $250 million in proceeds from the ongoing for-profit conversion of Milwaukee-based Cobalt Corp., a holding company for Blue Cross and Blue Shield United of Wisconsin, says Dick Klatschke, spokesman for Medical College of Wisconsin.
Even now, neither Klatschke nor his counterpart at the University of Wisconsin, Linda Dietrich, are fully prepared to believe the new price announced by WellPoint, based in Thousand Oaks, Calif.
"It's really a speculative number," Dietrich says. "It all has to be approved by the foundation and by the state insurance department."
"You never know if the value of the stock is going to drop," Klatschke adds.
Klatschke says Cobalt is almost wholly owned by Wisconsin United for Health Foundation, which was created when state officials approved the for-profit conversion two years ago. As part of that process, Cobalt is converting its assets into stocks over the next five years, he adds.
Klatschke says proceeds for the stock sales already are being deposited with the foundation and will be distributed to the two schools after the foundation approves their spending plans, which the schools will present the foundation on June 26.
Until that time, neither school is detailing how it will spend the money, but Klatschke says his school has some general plans.
Under the foundation's rules, he says, each school must use 35% of the money for public health projects around the state.
He says his school would then use the rest for educational programs and research. Research priorities, he says, include cardiovascular disease, cancer, diabetes and neurological diseases like Alzheimer's.