Fairview Health Services has bought out its joint venture partners in insurer PreferredOne. The plan saw dramatic growth after its initial entry into the Minnesota health exchange but left shortly after experiencing some later losses.
Minneapolis-based Fairview, which also has a deal underway to integrate the University of Minnesota Physicians into a newly formed academic medical system, acquired North Memorial Health Care's 25% stake in the insurance company and the 25% held by PreferredOne Physician Associates. Fairview was the sole other owner. Financial terms of the acquisition were not disclosed.
“This new ownership structure strengthens Fairview's already robust continuum of health care services, deepening capabilities that are critical in today's health care environment,” David Murphy, Fairview's interim CEO said in a blog post announcing the deal. The insurer has 285,000 members.
Fairview had the option to buy its partners' shares after the system loaned PreferredOne $18.75 million in October 2014 and guaranteed another $40 million credit line, which the insurer has used, according to financial statements. PreferredOne accounted for 5.7% of Fairview's patient revenue in 2014.
The insurers' financial losses followed its entry into Minnesota's health insurance exchange. PreferredOne exited the exchange rather quickly.
“The decision was made due to the volatility of the individual insurance market on the exchange and the associated premiums, given the lack of historical context for premium setting, as well as issues with the MNSure exchange,” the financial statements said.