Anthem announces plans to convert to a for-profit

The insurer says demutualization is necessary to raise capital for expansion, but physicians and consumer groups are worried.

By Julie A. Jacob, AMNews staff. Feb. 26, 2001.

Citing the need to raise capital for future expansion, Anthem Inc., one of the nation's largest owners of Blue Cross Blue Shield-licensed plans, announced that it is planning to convert from a mutual insurer to a publicly traded company.

Indianapolis-based Anthem, which has about 7 million policyholders, is the Blue Cross Blue Shield licensee in Colorado, Connecticut, Indiana, Kentucky, Maine, Nevada, New Hampshire and Ohio.

A special Anthem board of directors committee is developing the conversion plan, which it will submit to the full Anthem board for approval. If both Anthem's board and the Indiana Dept. of Insurance approve the conversion, the process should be completed by the end of the year, according to the insurer. With $5.7 billion in assets, Anthem would be the nation's fifth-largest publicly traded health insurance company.

Anthem is demutualizing to gain greater financial flexibility and raise capital for expansion, said Anthem CEO Larry Glasscock.

Physicians won't notice any change in the way Anthem does business with them after the conversion, said Glasscock. "I don't see any impact; I don't think our corporate form will have any impact on our physician community," he added.

However, an analyst who tracks Anthem disagreed with Glasscock's assessment.

Although the conversion "makes perfect sense from a business point of view," physicians certainly won't benefit from it, said Duane Sobecki, a senior partner with Corsair Health, a health care consulting firm in Indianapolis. The capital Anthem will gain from selling stock will enable the company to acquire more companies and increase its market share. That, in turn, will likely mean that Anthem will put more pressure on physicians to accept lower fees, said Sobecki. [...]