Does Joe Swedish's Appointment Hint at WellPoint Plans to Acquire Hospitals?
Last week, healthcare insurer WellPoint named Joseph Swedish, president and CEO of Livonia, Mich.-based Trinity Health, as its new CEO. The appointment of a hospital executive without experience on the payor side took most of the industry by surprise, including stockholders. WellPoint's shares dropped 4.6 percent the day following the announcement.
Eric A. Klein, JD, partner at Sheppard Mullin Richter & Hampton in Los Angeles, said WellPoint's surprising CEO selection may hint at the payor's plans for more provider alignment in the years to come, including hospital acquisitions, according to this Lexology article.
"WellPoint could continue as do other health plans and view hospitals merely as contracted providers and subject to ongoing rate negotiations to control costs, or it could take a page from the Kaiser playbook and revamp a large piece of the healthcare continuum of care by truly aligning the health plan, the hospitals and the physicians, especially in light of the recent launch of the bundled payment initiative," Mr. Klein wrote.
Indianapolis-based WellPoint is the largest managed care branch within the Blue Cross and Blue Shield Association with nearly $56 billion in assets, according to the Lexology article. By vertically integrating with providers, or acquiring one or more hospital systems, WellPoint could differentiate itself from its competition.
Mr. Klein points out that WellPoint's competitors, United HealthGroups' Optum, "has to date eschewed investing in hospitals and instead has spent significant amounts on managed care-ready physician entities and technology companies that support and service such entities."
Mr. Swedish is no stranger to hospital mergers and acquisitions. He will leave Trinity next month, even though the system is in the middle of a merger with Newtown Square, Pa.-based Catholic Health East. The pending consolidation will create an 82-hospital system across 21 states, making it the fifth largest hospital system in the country.
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