Bjc Seeks Tie with Blue Cross Companies Confirm They Are Talking about an Alliance

Article excerpt

BJC Health System, Missouri's biggest hospital company, confirmed Wednesday that it wants to combine with Blue Cross and Blue Shield of Missouri, the state's largest health insurer.

Neither BJC nor Blue Cross would say what kind of combination they e nvision, but both said publicly for the first time that they are talking about an alliance. The Post-Dispatch reported in November that BJC was negotiating to buy Blue Cross and its subsidiary, RightChoice Managed Care Inc.

After Blue Cross issued its statement, RightChoice shares jumped $1.62 1/2, closing at $14.50. Blue Cross owns 80 percent of RightChoice's shares, and the other 20 percent are traded on the New York Stock Exchange. Blue Cross said those shares might be bought in a tender offer as part of a deal with BJC. Blue Cross said it would conduct an in-depth analysis of a possible business combination with BJC and would negotiate exclusively with BJC until March 18. Missouri Attorney General Jay Nixon said Wednesday that if the talks do result in an acquisition or a merger, the deal would be of huge and historic proportions. It would create the "health care behemoth of the region," Nixon said. Nixon said his office would conduct an exhaustive review of any such deal, focusing on antitrust and consumer-protection issues. The Missouri Department of Insurance would conduct its own review to make sure any such alliance would not lessen insurance competition. "It's fair to say we're dealing with something that doesn't have a precedent," said Randy McConnell, a spokesman for the Insurance Department. "We haven't had the kind of crossover before where a health-care entity is buying a major insurer. We've always been dealing with an insurer merging with another insurance entity." Competitors said Wednesday that it was too soon to know how a BJC-Blue Cross alliance might affect them. Kevin Kast is chief executive of a managed-care organization owned by St. Louis Health Care Network, a hospital group that competes with BJC. He said the network's hospitals and doctors serve 200,000 to 300,000 Blue Cross members. "Our relationship with the Blues is very strong," Kast said. "If there were an interruption, it would be problematic for our patients and providers." Unity Health System is the second-biggest hospital group in St. Louis. Ronald B. Ashworth, Unity's president, said he does not expect Blue Cross to discontinue any relationships with health-care providers because that would narrow customers' choices. Today's health-care system, in St. Louis and many other cities, is composed of companies that provide care and insurers that assume the risk. …