Following a published report speculating anew on a possible planned sale of its Northeast insurance plan to a Connecticut rival, Health Net gave no inkling as of early June on whether it had in fact struck a deal.
In December 2008, Health Net alerted investors of plans to potentially sell off its operations in the Northeast and Arizona in part to focus on its growing business selling policies to the U.S. military. Late last month, the Hartford Courant reported the company was negotiating a sale of the operations to EmblemHealth, the New York City-based parent of ConnectiCare, with the Courant not identifying the source of its information. Several other publications had previously reported a possible deal in the works, with the companies declining comment on the reports. In early June, the Medical Society of the State of New York formally requested the state”™s insurance commissioner and attorney general to intercede to ensure continuity of patient care in the event of a deal between the companies.
ConnectiCare has its main office in Farmington, and such a combination could threaten Health Net”™s Northeast headquarters in Shelton, which in the past has reported having 900 employees.
In the event of a deal, however, it would also be possible that companies would choose to consolidate operations in Fairfield County, where ConnectiCare CEO Mickey Herbert lives and is an active member of the business and philanthropic communities.
With 310,000 and 203,000 insured members in Connecticut last year, respectively, a combined Health Net and ConnectiCare would rival Anthem Blue Cross & Blue Shield of Connecticut Inc. as the largest health maintenance organization in the state. U.S. News and World Report ranked Health Net of Connecticut the 11th-best health plan in the nation last year, with ConnectiCare two rungs behind.
Aetna Inc. Cigna Corp. and Oxford Health Plans, which operate the state”™s three other HMO”™s, have fewer than 140,000 members combined.
Given Health Net”™s No. 2 market share in Connecticut and strong reputation, the company”™s business here would seemingly represent a boon for an expansion-minded insurer interested in gaining a foothold in a state with by some accounts both the healthiest and wealthiest populaces in the nation.
Any such deal could be more difficult to pull off, however, given the still-tight credit markets; downtrodden corporate stocks; and uncertainty over the future of private health insurance funds as federal and state governments consider overhauling the market.
While New York carriers have shown a healthy interest in the Connecticut market ”“ ConnectiCare was acquired in 1999 by an EmblemHealth predecessor company ”“ the same has not held true for Massachusetts companies, which insure a similar demographic in their home state.
While ConnectiCare and Health Net both sell HMO policies in Massachusetts, to date the Bay State”™s two top-ranked nonprofit HMOs have yet to trumpet any interest in coming to Connecticut, despite the large number of residents in the Hartford-Springfield, Mass. corridor who commute across the border each day.
The two Massachusetts plans, Harvard Pilgrim Health Care and Tufts Associated Health Maintenance Organization, both operate multistate plans, Harvard Pilgrim doing business in Maine and New Hampshire; and Tufts selling policies in New Hampshire and Rhode Island.
On similar reasoning this spring, Worcester-based Fallon Community Health Center ”“ ranked among the top 20 HMOs according to USNWR ”“ expanded its health provider network into New Hampshire, signing contracts with 15 hospitals and physician groups there.
There is ample precedent for nonprofit insurance carriers acquiring for-profit entities ”“ only late last month, the Oregon nonprofit PacificSource Health Plans inked a pact to acquire a for-profit insurer in Idaho originally started by physicians.
