The 'strategic affiliation' will share management and administrative services with the aim of improving quality, lowering costs, and improving the consumer experience.
Cambia Health Solutions and Blue Cross and Blue Shield of North Carolina announced Tuesday that they will combine management and administrative services.
"We have to do something different to make health care better, simpler, and more affordable for the people we serve," Patrick Conway, president and CEO of Blue Cross NC, said in a media release.
"By sharing resources, innovations, and best-in-class services we can fundamentally transform the way individuals and families experience the health care system," Conway said.
Working under the Cambria Health Solutions name, the "strategic affiliation" will be governed by a board made up of 10 members from Blue Cross NC's board and nine members from Cambia's board.
Blue Cross NC will retain its own separate board and name, and the two companies will retain their separate, tax-paying, not-for-profit corporate structures.
"People and their families are hurting every day in the current health care system, longing for care focused on their needs,” said Mark Ganz, president and CEO of Cambia Health Solutions. "Together, we have the power to accelerate transformation, be a model for what is possible, and positively impact the lives of those we serve."
Under the affiliation, Ganz will be executive chair of Cambia's board, and Conway will be Cambia's new CEO. Conway also will remain CEO of Blue Cross NC, and the corporate headquarters will be in Durham, NC, and Portland, OR.
The strategic affiliation also will maintain the separate health plans in five states, all locally led and regulated.
The deal is subject to regulatory approval in North Carolina, Oregon, Washington, Idaho, and Utah.
While the two companies are calling the deal a "strategic affiliation," Nathan Ray, a senior principal in West Monroe’s healthcare & life sciences practice said "it appears to be like a merger."
"It will take the form of a long-term MSA with an agreement to share management, operations and administrative staffs, and the BCBSNC CEO becoming the CEO of Cambia," Ray said in an email exchange with HealthLeaders.
Ray said sharing management operations and administration makes sense because it provides cost synergies.
"They don't directly compete which probably allowed the executive teams to discuss such an opportunity," Ray said. "Geographic advantages including cheaper labor, or healthier membership may also be fringe benefits."
"In many cases consolidation of management, operations, administration of payers is an easy exercise to realize efficiencies and take advantage of unique opportunities sharing technology or strategy," he said.
Blue Cross NC and Cambia's health plans include Regence BlueCross BlueShield of Oregon, Regence BlueShield in Washington, Regence BlueShield of Idaho, and Regence BlueCross BlueShield of Utah.
The two companies said the affiliation builds on their existing Echo Health Ventures, a healthcare investment and development company launched in 2016.
“We have to do something different to make health care better, simpler, and more affordable for the people we serve.”
Patrick Conway, president and CEO of Blue Cross NC.
John Commins is the news editor for HealthLeaders.
KEY TAKEAWAYS
Working under the Cambria Health Solutions name, the 'strategic affiliation' will be governed by a joint board of directors.
The two companies will retain their separate, tax-paying, not-for-profit corporate structures.
The deal is subject to regulatory approval in North Carolina, Oregon, Washington, Idaho, and Utah.