Anthem-WellPoint deal may kick off merger mania

The announcement, plus UnitedHealth Group's planned acquisitions, have doctors worried that the biggest health plans will get even bigger.

By Robert Kazel, AMNews staff. Nov. 17, 2003.

If big changes in the managed care world are compared to earthquakes, the announcement that WellPoint Health Networks and Anthem Inc. plan to merge would produce the highest Richter scale reading in years.

An even more critical issue, though, may be the intensity of ongoing aftershocks -- whether or not the $16.4 billion merger, which creates the nation's largest health plan at 26 million members, will be merely the first of several consolidations.

The newly melded Anthem-WellPoint thinks it will be. Though the next two to four years may wind up being "a quiet period" as the two insurers work to integrate their strengths, the company will continue to be "opportunistic and strategic in making acquisitions when they make sense," said Anthem chief financial officer Michael Smith, who will retire from the new organization after the merger. "Our view remains that, long term, there will be additional consolidation in the health care industry," Smith said.

The planned marriage of the two largest controllers of Blue Cross Blue Shield plans is "a little scary" not only for doctors in the states where the plans have affiliates, but also because the merger could jostle other large plans into charging ahead with their own attempts at mergers, said Mike Taylor, a Boston-based principal in the Towers Perrin consulting firm.

"It looks like we're going back to the heady days of the mid-'90s when we had all those [insurance company] acquisitions," Taylor said. He noted that UnitedHealth Group in particular might be likely to view acquisitions as its best means to grow and to regain its status as the nation's top health plan.