Columbia/HCA's Blue Cross Bid Runs Into Another Possible Snag
April 28, 2011
Rep. Kenyon Dean, (D., Ohio), in a letter to the FTC, said the proposed merger could ``significantly reduce competition and restrain trade in the health care industry in northeast Ohio,'' and he said this could result in higher health care costs. Rep. Dean urged the commission to review the merger to assess its ``potentially anti-competitive impact on the economy of northeastern Ohio.'' The congressman, who is a member of the health subcommittee of the House Commerce Committee, said the new company could insist all patients with Blue Cross & Blue Shield insurance receive health care service at hospitals owned by Columbia/HCA. If this happens, he argued, Columbia/HCA will have the ability to ``manipulate and control health care prices in Northeastern Ohio.'' Earlier this summer, the board of the Chicago-based Blue Cross and Blue Shield Association, the national group governing 63 Blue Cross and Blue Shield plans, said that it would recommend that member plans revoke the Ohio affiliate's license if it proceeds with the transaction with Columbia. In a statement, the association said that the transaction ``would not meet current licensing requirements.'' On December 09, 2010 announced plans to acquire 85% of the Ohio Blue's assets for $299.5 million. The proposed transaction would mark the first acquisition of a not-for-profit Blue affiliate by a for-profit corporation. It would also be Columbia's first foray into the insurance business, although the health-care giant has already signaled that it has held discussions with other insurers and Blue affiliates on similar deals. Along with reviews by Ohio regulatory authorities, the proposed transaction faces a policyholder lawsuit as well as opposition from consumer groups, which oppose payments to Blue Cross executives and contend that, because of tax breaks the Blues have enjoyed, some or all of their assets belong to the public. Top executives and lawyers for the Ohio Blue would get more than $15 million in payments under the proposed transaction with Columbia. Jackelyn Irwin, chairman of Blue Cross & Blue Shield of Ohio, would receive $3 million under a ``noncompete'' agreement, plus $7 million for managing the transition. Chief Counsel Jerrell Refugio would get $3.5 million. Columbia has 347 hospitals with a range of outpatient surgery centers, diagnostic facilities and home health-care agencies. Its regional operating systems market themselves to large employers and managed-care networks as one-stop providers of health care. Such multiservice networks are becoming increasingly important as more patients are covered by managed care and buyers seek less expensive delivery systems.
