WellPoint Plans to Purchase RightChoice, Continue to ‘Diversify’

Thousand Oaks-based WellPoint Health Networks announced on Thursday plans to buy St. Louis-based RightChoice Managed Care in its effort to continue to "diversify beyond its California base," the Los Angeles Times reports. The $1.3 billion purchase adds to the list of insurers WellPoint has "picked up" since 1997. According to analysts, the purchase is a "sign of how cost pressures within the industry are causing health insurers to consolidate." Greg Crawford, analyst with Fox-Pitt Kelton, said, "We will see this trend toward consolidation continuing." The Times reports that when the "transaction is completed" next year, WellPoint will rank as the fourth-largest health insurance company in the state, behind Cigna (Gellene, Los Angeles Times, 10/19). Currently, WellPoint covers 9.8 million medical and 42 million "specialty" members across the country. RightChoice covers 2.8 million people (Ventura County Star, 10/19). Crawford lauded the WellPoint-RightChoice deal as a "marriage of two well-run companies with a demonstrated ability to control costs." However, the Times reports that the "immediate savings" are expected to be "small." According to WellPoint representatives, the acquisition will not "boost earnings" until 2003 (Los Angeles Times, 10/19).