Plans singing the merger and consolidation Blues

In most cases, analysts say, state regulators will decide whether the number of Blues licensees continues to shrink as companies meld.

By Julie A. Jacob, AMNews staff. May 20, 2002.

The announcement that Blue Cross Blue Shield giant Anthem Inc. is buying Trigon Inc. for $4 billion raises the question of whether it is inevitable that all of the remaining single-state Blues plans will merge with other, bigger Blues companies and, if so, what that means for physicians.

Although more mergers are likely among the 43 remaining separate companies that are Blues licensees, it's unlikely all will be snapped up by for-profits like Anthem, WellPoint Health Networks or Highmark Inc. during the next few years.

A decade ago, there were more than 80 separate companies that were licensed to use the Blue Cross Blue Shield trademark, but today, as a result of mergers among plans, only 43 companies remain, according to the national BlueCross BlueShield Assn. Once Anthem completes its purchase of Trigon, a publicly traded company that operates its Blues plan only in Virginia, it will be 42 companies.

"I don't think you're looking at in three years there will only be three [Blues] plans, but there will be a reduction in the number," said Peter Kongstvedt, MD, who tracks Blues plans as vice president of health practice at Cap Gemini Ernst and Young, a management and consulting firm.

A lot depends on the regulatory climate of the state in which the Blues plan that is being eyed for a merger is located. That is especially true when a nonprofit plan must first convert to a for-profit in order to merge. While such conversions have proceeded quickly in some states, in other states such conversions have stalled over controversies about the transfer of the company's assets to charitable foundations and how the conversion will affect state residents. [...]