Is Centene or WellCare on Ascension’s shopping list?
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.