Montana hospitals made an insurer to compete with BCBS. It worked — until hospital leaders wanted out

Montana hospitals once owned the second largest insurer in the state behind Blue Cross Blue Shield of Montana. While the company succeeded in challenging BCBS, hospital leaders ultimately left the insurance game — and folded their venture into the insurer they were trying to ward off, according to the Bozeman Daily Chronicle.

In 1998, a new health insurer, New West Health Services, was created by four Montana hospitals: Billings Clinic, Community Medical Center in Missoula, Northern Montana Health Care in Havre and St. Peter's Health in Helena. Two more hospitals bought into the venture in 2006: Bozeman Health and Benefis Health System in Great Falls.

The hospitals intended to challenge BCBS of Montana's dominating presence in the state through New Health, which covered hospital employees and other members. While BCBS of Montana remained the state's largest insurer, New West grew into the second largest in Montana's commercial insurance market and intensified competition for BCBS.

But in 2011, hospital leaders decided they wanted to leave the insurance business. The deal spun off 11,000 members to the very insurer they were trying to challenge. In exchange, BCBS agreed to give each hospital a portion of $26 million over six years, according to the Bozeman Daily Chronicle. The hospitals also received two seats on the insurer's board of directors.

After the deal, BCBS of Montana owned more than 72 percent of commercial health plans in the state in 2012. The hospitals said ending New West was ultimately in the best interest of their employees, according to the report. Healthcare policy experts told the newspaper it's hard to say how the deal affected healthcare costs for Montana residents. 

Read the full report here.

More articles on payers:
WellCare, Centene deal to close today: 3 things to know
Trump administration to issue guidance on Medicaid block grants: 5 things to know
16 medical groups that support 'Medicare for All,' single payer

© Copyright ASC COMMUNICATIONS 2020. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.

 

Featured Webinars

Featured Whitepapers