An HMO subsidiary of Blue Cross and Blue Shield of Michigan has called off plans to acquire a competing health plan owned by a hospital system in Lansing after the U.S. Justice Department threatened to file a lawsuit to block the merger over antitrust concerns.
Mich. deal dropped in wake of Justice Department move
The department said in a news release that Blue Care Networks of Michigan would have controlled nearly 90% of the insurance market in the Lansing area if it had been allowed to purchase Physicians Health Plan of Mid-Michigan, which is owned by three-hospital Sparrow Health System.
Physicians Health Plan is the second-largest insurer in the Lansing market, with approximately 20% market share and $250 million in annual revenue in 2008. Blue Cross and Blue Shield of Michigan reported $21 billion in revenue in 2008, and 70% market share in Lansing, federal regulators said.
The two healthcare companies confirmed the change in plans in a joint news release, saying the substantial cost and extended time frame to gain approval of the acquisition were not in either organization's best interests.
“In light of the regulatory climate, it has become obvious that we should move on and continue focusing on the best ways to serve PHP's members and our region,” Physicians Health Plan President and CEO Scott Wilkerson said in the release.
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