CHI eyes Medi­care Ad­van­tage growth

Modern Healthcare - - LATE NEWS - —Me­lanie Evans

As part of its ex­pan­sion into in­sur­ance, Catholic Health Ini­tia­tives has an­nounced a deal for QualChoice Hold­ings, Arkansas’ sec­ond-largest HMO. Terms of the deal were not dis­closed and must be ap­proved by the Arkansas In­sur­ance Depart­ment.

Un­der terms of the deal, CHI would buy out QualChoice own­ers TriZetto Corp.; the Univer­sity of Arkansas for Med­i­cal Sci­ences; Tenet HealthSys­tem Med­i­cal; Arkansas Chil­dren’s Hospi­tal, Lit­tle Rock; and QualChoice of Arkansas.

CHI’s Lit­tle Rock-based sub­sidiary, St. Vin­cent Health Sys­tem, is also an ex­ist­ing owner in QualChoice.

The pur­chase would ex­tend CHI’s reach in the health in­sur­ance mar­ket, which the Englewood, Colo.-based sys­tem ce­mented last year with the $24 mil­lion ac­qui­si­tion of Sound­path Health, a Federal Way, Wash.-based Medi­care Ad­van­tage provider that in­sures 17,000 in­di­vid­u­als.

Lit­tle Rock, Ark.-based QualChoice, which op­er­ates across Arkansas and whose health plans cover 70,000, is likely to en­ter the Medi­care Ad­van­tage mar­ket, said Michael Stock, CEO and pres­i­dent of QualChoice.

The Medi­care Ad­vatage mar­ket is one that CHI’s Michael Rowan de­scribed dur­ing a re­cent in­ter­view as “a low-risk means of get­ting into the in­sur­ance busi­ness.”

Rowan, the sys­tem’s pres­i­dent and chief op­er­at­ing of­fi­cer, said CHI of­fi­cials were in talks to ac­quire other Ad­van­tage plans as part of a na­tional ex­pan­sion of the sys­tem’s in­sur­ance as­sets.

“Our goal is not so much to buy a Medi­care Ad­van­tage pro­gram for a spe­cific mar­ket, but to bring in the skill sets and the in­fra­struc­ture to use across all of our mar­kets,” he said.

QualChoice likely will serve as the back­bone of the health sys­tem’s na­tional in­sur­ance ex­pan­sion, Stock said. CHI cur­rently op­er­ates across 18 states with a grow­ing num­ber of hos­pi­tals, now to­tal­ing 89 fa­cil­i­ties, af­ter a se­ries of re­cent deals, in­clud­ing ac­qui­si­tions of St. Luke’s Health Sys­tem in Hous­ton and deals in Ne­braska and Wash­ing­ton.

Its rapid ex­pan­sion and re­cent physi­cian hir­ing are part of the sys­tem’s push to en­ter into con­tracts with in­sur­ers or di­rectly with em­ploy­ers that of­fer fi­nan­cial in­cen­tives to im­prove over­all pop­u­la­tion health, Rowan said.

Con­tract­ing di­rectly with em­ploy­ers could po­ten­tially put the health sys­tem in com­pe­ti­tion with ex­ist­ing health in­sur­ance com­pa­nies, Rowan said.

“There may be op­por­tu­ni­ties where we rec­og­nize that there are cer­tain skill sets that make sense that the pay­ers have. We could work in part­ner­ship with them,” he said.

As early as next year, the health sys­tem may of­fer in­sur­ance plans de­vel­oped with QualChoice in mar­kets out­side of Arkansas, Juan Ser­rano, CHI’s se­nior vice pres­i­dent of payer strat­egy and op­er­a­tions, said.

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