Is Cen­tene or Wel­lCare on As­cen­sion’s shop­ping list?

Modern Healthcare - - NEWS - By Me­lanie Evans

As­cen­sion Health most likely is eye­ing Wel­lCare Health Plans or Cen­tene Corp. as its in­sur­ance ac­qui­si­tion tar­get, one prom­i­nent in­dus­try an­a­lyst says.

Wel­lCare, a Medi­care and Med­i­caid man­aged-care com­pany based in Tampa, Fla., op­er­ates in 18 states, in­clud­ing 12 that over­lap with As­cen­sion Health’s mar­kets, said Ana Gupte, a man­ag­ing di­rec­tor and se­nior an­a­lyst at health­care in­vest­ment bank Leerink Part­ners, in a re­search re­port.

Cen­tene, based in St. Louis where As­cen­sion is head­quar­tered, op­er­ates in 20 states, Gupte wrote. Cen­tene does not op­er­ate a health plan in Michi­gan. But last De­cem­ber, the com­pany reached a deal to ac­quire a ma­jor­ity stake in Fidelis Se­cure Care of Michi­gan, which de­vel­ops Medi­care man­aged-care drug plans and spe­cial­needs plans. The deal is ex­pected to close in the fourth quar­ter of this year, ac­cord­ing to Se­cu­ri­ties and Ex­change Com­mis­sion fil­ings.

Robert Henkel, As­cen­sion Health’s pres­i­dent and CEO, re­cently said dur­ing an in­vestor con­fer­ence in New York that his sys­tem is in talks to ac­quire an in­surer with op­er­a­tions in 18 states. As­cen­sion, a Ro­man Catholic sys­tem, is the na­tion’s largest not-for-profit health sys­tem, with 101 hos­pi­tals.

“Such a trans­ac­tion, if it ma­te­ri­al­ized, has broader im­pli­ca­tions for health­care and could po­ten­tially cat­alyze a new wave of ver­ti­cal con­sol­i­da­tion across hos­pi­tals and pub­licly traded health plans, which has not been broadly con­tem­plated within the in­vest­ment com­mu­nity,” Gupte wrote.

In an in­ter­view, Gupte said larger pub­licly traded in­sur­ers have not ex­pressed an in­ter­est in hospi­tal deals but in­stead are mov­ing to ac­quire physi­cian prac- tices. Also no­table, she said, would be a not-for-profit health sys­tem’s deal for a for-profit in­sur­ance com­pany.

Rep­re­sen­ta­tives of Wel­lCare and Cen­tene de­clined to com­ment.

As­cen­sion Health is not the only hospi­tal op­er­a­tor with an in­ter­est in op­er­at­ing in­sur­ance plans. Catholic Health Ini­tia­tives, Englewood, Colo.; Part­ners Health­Care, Bos­ton; and the Detroit Med­i­cal Cen­ter all have ac­quired health plans. Other sys­tems have moved to build health plans from scratch, in­clud­ing Sut­ter Health, Sacra­mento, Calif.; North Shore-Long Is­land Jewish Health Sys­tem, Great Neck, N.Y.; and a com­bined ef­fort by the Ge­or­gia health sys­tems Pied­mont Health­care, At­lanta, and Wel­lS­tar Health Sys­tem, Ma­ri­etta. Some sys­tems are par­tic­u­larly in­ter­ested in the Medi­care Ad­van­tage mar­ket.

Some ob­servers are con­cerned about the ef­fect of these ver­ti­cal in­te­gra­tion moves on health­care prices. A study in the jour­nal Health Ser­vices Re­search last year found that plans of­fered by hos­pi­tals re­ceived higher qual­ity rat­ings from con­sumers but charged higher pre­mi­ums.

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