BLUE SHIELD OF CALIFORNIA: ACQUIRES CAREAMERICA
Blue Shield of California, a "major nonprofit health careThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
firm," has announced plans "to acquire a for-profit managed care
firm and turn it into a nonprofit business," Los Angeles Times
reports. Blue Shield will acquire Woodland Hills, CA-based
CareAmerica Health Plans for $175 million, giving the combined
company 1.8 million members and more than $2 billion in revenue,
making it the state's fifth largest managed care company. The
merger would enable Blue Shield to compete with larger insurers,
such as Kaiser Foundation Health Plan and PacifiCare Health
Network, for contracts with hospitals. According to the Times,
Blue Cross was at risk of "becoming an acquisition target itself"
if it had not merged with CareAmerica.
Blue Shield Chair and CEO Wayne Moon said of the deal, "We
are bucking a trend." He said there were "several key
advantages" to acquiring CareAmerica. One advantage is that
CareAmerica's "HMO for Medicare beneficiaries, which has about
45,000 members, is well-regarded in the industry." Another
advantage is that CareAmerica "has expertise in marketing to
ethnic populations, a potential area of growth" (Olmos, 7/30).
San Francisco Chronicle reports that the merger will allow
Blue Shield to provide health plans statewide. Myra Snyder,
president of the California Association of Health Plans, said,
"Members want a statewide plan and more choice of doctors and
hospitals. This is especially appealing to people who do not
live and work in the same city" (Sinton, 7/30).