WellPoint looking to increase its size by buying more health plans

The company would like to acquire additional BlueCross BlueShield plans, but it is also targeting single-state, non-Blues insurers.

By Emily Berry, AMNews staff. Oct. 22/29, 2007.

After taking a few years to digest its numerous health plan acquisitions, WellPoint is hungry again for deals.

A WellPoint Inc. executive said at a recent investors conference that the company, built by acquiring BlueCross BlueShield-affiliated plans, would like to acquire more Blues plans. "Our [merger and acquisition] strategy is always first to acquire a Blues plan," said Wayne DeVeydt, WellPoint's executive vice president and chief financial officer, according to a conference transcript. "We think the brand is very powerful, and we have seen from our history of acquiring Blues plans that it has been a very successful model."

But WellPoint is expanding its strategy beyond Blues plans as well -- a necessity, analysts said, given the unfriendly regulatory environment it might face by trying to acquire such insurers.

DeVeydt, speaking Sept. 19 at the Merrill Lynch Global Pharmaceutical, Biotech and Medtech Conference in London, also said WellPoint would look at acquiring small, single-state plans. Those small plans "are going to be suffering from the macroeconomic investment that needs to be made in this business," DeVeydt said.

Echoing retired chair and CEO Larry Glasscock's comments to the journal Health Affairs in January, DeVeydt told the conference audience that there is still much consolidation to be done among health plans. "If you looked at us 10 years ago, the top 10 companies made up 27% [of the market]. Today the top 10 companies make up 54%. I would venture to say that in the next five to 10 years, the top 10 will make up 75% to 80%. So we are far from being done on consolidation," he said.