Two major Blue insurers, Cambia, BCBS North Carolina, combine in strategic alliance

Patrick Conway, CEO of Blue Cross NC, will also lead Cambia in strategic alliance.

Cambia Health Solutions and Blue Cross and Blue Shield of North Carolina, both major Blue insurers, have formed a strategic affiliation in which Blue Cross NC CEO Patrick Conway will become Cambia's new CEO and Mark Ganz, CEO and president of Cambia, will serve as the new executive chair of Cambia's Board of Directors.

Conway will also remain CEO of Blue Cross NC.

This is not a merger or an acquisition, the companies said. The agreement allows the not-for-profit businesses to share management, administrative, operational and other corporate services under the Cambia Health Solutions name.

There is no definitive timeline for the affiliation that remains subject to regulatory approval in North Carolina, Oregon, Washington, Idaho and Utah.

Cambia, headquartered in Portland, Oregon, consists of more than 20 companies including Blue Cross and Blue Shield plans in Utah, Washington and Oregon held by Cambia's Regence Health Plans, and Blue Shield of Idaho, which is managed by Regence under a management services agreement.

The deal is expected to generate about $16 billion in combined revenue and cover more than six million people, according to The Wall Street Journal.  Both companies are members of the Blue Cross Blue Shield group of insurers.

WHY THIS MATTERS

While mergers and consolidations have become common in healthcare, Blue Cross Blue Shield insurers have remained largely independent.

Blue Cross NC is a leader in addressing costs and improving outcomes through new, value-based relationships with providers, the companies said.  Its CEO has experience in innovative models as the former director of the Innovation Center for the Centers for Medicare and Medicaid Services.

The alliance avoids the more difficult regulatory hurdles of a merger and its acquisition costs, while achieving the resulting savings and cost efficiencies.

The companies will adopt value-based payment models in all the states.

TECHNOLOGY INNOVATION

"We will invest more towards data analytics and new health technologies that will close gaps in care, provide better health insights to our members, and identify at-risk members early on to address health challenges," the companies said. "We will increase investments in new technologies to provide best-in-class consumer-facing and provider-facing digital experiences."

This includes building next generation care management to improve customer experiences and investing in additional IT infrastructure for faster, more accurate backend processing. 

WHAT ELSE YOU NEED TO KNOW

The health plans will remain separate in all five states.

Both companies will retain their separate, tax-paying, not-for-profit corporate structures, including their respective boards and names.

Blue Cross NC and Cambia will continue to contract directly with providers and customers. All plans will continue to be locally led and subject to all state regulations and requirements, including rate review.

In his new role as Cambia's CEO, Conway will lead operations in the five states, including the senior management team and all operating and capital allocation decisions.

Ganz will chair and lead the development of the reconfigured Cambia Board and have primary oversight of corporate development, Echo Health Ventures and Cambia's consumer platform.

Under their long-term management agreement, the two companies have contracted to operate under a common management team drawn from both companies and to share key management, administrative, operational and other corporate services such as human resources, legal, finance, information technology and call centers.

ON THE RECORD

"By sharing resources, innovations and best-in-class services we can fundamentally transform the way individuals and families experience the healthcare system," said Dr. Patrick Conway, president and CEO of Blue Cross NC.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com