Blue Cross and Blue Shield companies Highmark and HealthNow New York announced the finalization of their affiliation on Monday, a collaboration that they say will lead to better services and lower costs for their 6.5 million members.
Under the agreement, Pittsburgh-based Highmark, which serves members in Pennsylvania, Delaware and West Virginia, will acquire the Blue Cross and Blue Shield license that HealthNow maintains. Operationally, the deal looks like a merger, except that no money will change hands between the two not-for-profits. The combined company will be named Highmark Blue Cross Blue Shield of Western New York and Highmark Blue Shield of Northeastern New York and will represent the fourth-largest Blues plan in the nation.
While HealthNow plans will be rebranded under the Highmark name, executives from the two companies emphasized that HealthNow will maintain its local presence. It will keep its headquarters and regional offices in New York and continue to be governed by a community board of directors.
During a conference call with reporters on Monday, Highmark President Deborah Rice-Johnson said the affiliation will enhance customer and clinician engagement and improve members' costs. In the coming months, the insurer will be looking to bundle products from both payers and integrate Highmark's dental subsidiary and stop-loss reinsurance coverage with HealthNow.
"The company will benefit from Highmark's business processes and tech to more effectively compete in market," Rice-Johnson said.
HealthNow CEO David Anderson added that product design for commercial plans could be changed "as soon as this fall," but that government plans would not be changed until at least 2022. The company's third-party HealthNow Administrative Service will also remain unchanged and continue to employ about 125 employees and serve a little over 100,000 members. He added that the company did not expect to cut any employees and that the local labor board president had signed off on the acquisition.
In addition to the merger, Anderson also announced that he will retire from his post as CEO at the end of the year but continue as a member of the board of directors in 2022.
Executive Vice President and Chief Strategy and Growth Officer Dr. Michael Edbauer will serve as president of the new company, where he will be responsible for the health plan activities. HealthNow's Senior Vice President and Chief Marketing and Communications Officer Julie Snyder will now serve in the combined company's community affairs division. HealthNow Senior Vice President and Chief Network Officer Ron Mornelli will also begin a new role in the not-for-profit's provider contracting and relations division.
As part of the affiliation, Highmark Western and Northeastern New York will commit $2 million annually over the next five years to initiatives to address health disparities throughout the 21-county New York service region.
The deal between Highmark and HealthNow was first announced last June and expands Highmark's health plan footprint to four states. The not-for-profit has previously affiliated with Blues plans in Delaware and West Virginia and has also completed a merger with Blue Cross of Northeastern Pennsylvania.