Fairview to acquire struggling insurer UCare

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

Northwestern Memorial HealthCare is on a deal-making binge. The Chicago system is in talks to affiliate with Centegra Health System in northwest suburban Crystal Lake, Ill.

Centegra, a two-hospital system with a third set to open in August, would be the fourth such deal for Northwestern in roughly two years. A merger would create a nine-hospital system (10 when Centegra's hospital in Huntley opens this summer) stretching from 70 miles west of downtown Chicago, north to near the Wisconsin border. The systems signed a letter of intent and plans to explore an affiliation over the next several months.

Centegra posted $434 million in revenue for 2014, according to its most recent annual financial statement. Northwestern, by comparison, is much bigger, with $3.89 billion in 2015 revenue.

Northwestern has been adding community hospitals to its system and expanding its footprint out to the suburbs at a rapid pace. It's fending off rivals like Advocate Health Care, the largest health system in the state with hospitals that also are major rivals to Centegra. Since 2014, Northwestern has added Cadence Health and KishHealth, both in the western suburbs. Wheaton-based Marianjoy Rehabilitation Hospital and affiliates were the most recent addition. —Kristen Schorsch, Crain's Chicago Business