Fairview Health Services in Minneapolis is jumping into the health insurance business with both feet with plans to acquire UCare.
The deal announced last week, and expected to receive final approval by this summer, would shake up Minnesota's healthcare business and political landscape. Acquiring UCare would allow Fairview to build a much larger insurance division. Fairview recently became the full owner of health insurer PreferredOne and dropped out of the Minnesota Hospital Association.
For UCare, the merger may be a do-or-die situation because the health insurer lost nearly all its state Medicaid business. UCare eliminated more than a quarter of its workforce last year after Minnesota decided to end most Medicaid managed-care contracts with UCare, according to the Star Tribune.
Almost all of UCare's insurance business comes from taxpayer-funded programs. About 76% of its 2015 revenue came from Medicaid programs alone, according to UCare financial documents analyzed by Modern Healthcare. UCare ended last year with almost 500,000 members, but a vast majority of those are Medicaid members who are moving to other plans, leaving UCare with about 150,000 covered lives. The plan still has almost 93,000 Medicare Advantage members and also sells health plans on Minnesota's Affordable Care Act exchange. —Bob Herman