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
"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
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. …