IBC to sell percentage of insurance subsidiary to Cooper

Posted: April 11, 2013

Independence Blue Cross has agreed to sell a 20 percent stake in its New Jersey health insurance subsidiary, AmeriHealth New Jersey, to Cooper University Health Care, of Camden, the organizations announced Wednesday.

The deal, which requires regulatory approval, is part of a trend toward increased integration of hospitals and insurers in preparation for a shift to a system that pays providers lump sums for all care needed by an individual rather than for each discrete visit and treatment.

"This collaboration helps to break down the traditional barriers associated with health care by having two organizations work together as one," said Daniel J. Hilferty, president and chief executive of IBC. Hilferty declined to disclose the price Cooper agreed to pay.

Central to the partnership is the development of new, lower-cost insurance offerings, said Judith L. Roman, who is president and chief executive of AmeriHealth New Jersey, which was started in 1994 and employs 140 in its Cranbury headquarters.

"By designing the products around encouraging the consumer to use the Cooper health care system, we can start to improve the quality and lower the costs," she said.

People covered under existing AmeriHealth, which covers 200,000 in New Jersey, for a roughly 5 percent market share, will not see changes caused by the Cooper arrangement, Roman said. AmeriHealth accounts for 4 percent of Cooper's primary care patients.

AmeriHealth, which focuses on groups up to 1,000, plans to start selling insurance plans that combine the Cooper and AmeriHealth brands Jan. 1, pending approval by the New Jersey Department of Banking and Insurance, Roman said.

To be successful in attracting employers, the AmeriHealth-Cooper partnership will have to offer plans at 15 percent to 20 percent below the market, one expert said. "That's the sweet spot we're seeing across the country, said Jacque J. Sokolov, chairman and CEO of SSB Solutions, a Scottsdale, Ariz., consulting firm.

Sokolov called the investment in AmeriHealth New Jersey a smart move on Cooper's part, given the big changes expected in the way hospitals are paid.

The longer-term goal for Cooper and AmeriHealth is to create a so-called Accountable Care Organization, uniting a broad range of health-care providers and giving them incentives to work together to lower costs, officials said.

Cooper is not alone in buying part of an insurer.

Catholic Health Initiatives, of Englewood, Colo., and among the nation's biggest systems, last month spent $24 million for a majority interest in a health insurer.

Contact Harold Brubaker at 215-854-4651 or hbrubaker@phillynews.com.

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