Froedtert Health plans to take full ownership of Network Health after purchasing the remaining 50% stake in the insurer from Ascension Wisconsin.
The nonprofit health systems said Tuesday they signed a purchase agreement, a move that will complement Milwaukee-based Froedtert’s population health efforts, CEO Cathy Jacobson said in a news release.
Network Health offers commercial and Medicare health insurance plans for employees, individuals and families in 23 Wisconsin counties. Health systems can use the claims data to better hone care for patients with chronic diseases.
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The planned acquisition would not result in any coverage interruption and Ascension Wisconsin, the 17-hospital system that is part of St. Louis-based Ascension, will still be an in-network provider for Network Health, the organizations said.
Terms of the deal, which requires regulatory approval, were not disclosed.
There has been a flurry of health system merger and acquisition activity in the Midwest over the past 12 months. One of the proposed mergers includes Froedtert and Neenah, Wisconsin-based ThedaCare, which signed a definitive agreement to combine in September.
Health systems continue to look for partners that have a health insurance arm, merger and acquisition experts said.
A Modern Healthcare analysis showed that health systems’ integrated health plans provided a financial buffer from the effects of the COVID-19 pandemic. Health plan premium revenue held steady while the number of non-urgent procedures plummeted. Health systems with an integrated health plan tend to take on more risk via capitated payments and other forms of alternative payment models, reducing their reliance and fee-for-service reimbursement and potentially earning more revenue if the care is effective and efficient.
Froedtert recorded $66 million in operating income on operating revenue of $3.6 billion for its fiscal year ended June 30, according to its unaudited financial statement. That compares with year-ago operating income of $95.9 million on $3.35 billion of operating revenue.
Ascension record a $3.04 billion operating loss on $28.35 billion of operating revenue in 2023, according to its audited financial statement for the fiscal year ended June 30. Roughly half of the operating loss was related to impairment and nonrecurring losses. It recorded an $879.2 million operating loss on $27.98 billion of operating revenue in 2022.
