Blue Cross and Blue Shield of North Carolina announced Tuesday that it would be combining with the Oregon-based insurer Cambia Health Solutions, a move that would join together two large Blue Cross and Blue Shield affiliated insurers.
The two companies would together cover around six million people and have about $16 billion in combined revenue.
Blue Cross NC is bigger than Cambia, reporting $9.9 billion in revenue last year and covering 3.7 million people. Cambia had revenue of about $6 billion on coverage of around 2.6 million people.
The two companies said the goal of the combination was to improve quality, lower costs and speed up the development of new services. As part of the agreement, the companies will merge the corporate management, administrative and operational services under the Cambia Health Solutions name.
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However, the deal would also bring more power to Blue Cross NC CEO Patrick Conway. Conway will remain CEO of Blue Cross NC and will also become the CEO of Cambia as part of the deal, the companies said. Conway joined Blue Cross NC in 2017, after working in administration at the Centers for Medicare and Medicaid Services.
Mark Ganz, the current CEO of Cambia, will become the executive chair of Cambia’s board of directors. The headquarters of the combined insurers will be split between Durham and Portland, Ore.
“We have to do something different to make health care better, simpler, and more affordable for the people we serve,” Conway said in a statement. “By sharing resources, innovations, and best-in-class services we can fundamentally transform the way individuals and families experience the health care system.”
The agreement could lead to some changes for the combined workforces of the two insurers. Blue Cross NC has 4,700 employees across its four offices in North Carolina, the company said, while Cambia has around 2,000 employees at its Portland office, the Portland Business Journal reported.
“Both companies are constantly striving for ways to be more efficient while delivering more value to our members and employer groups,” Blue Cross NC spokesman Austin Vevurka said in an email. “... The companies will share services, which will cause some resources to shift. However, we are early in the process, and there will be no immediate changes until after regulatory approval.”
Vevurka also said that, through the affiliation, Blue Cross NC hopes to keep insurance premiums as low as possible.
“Our goal is to always have premiums as low as possible, and we believe this gives us the best opportunity to achieve that goal,” he said. “The affiliation will not cause rates to go up.”
Going forward, the Cambia board will be split between nine current Cambia board members and 10 people on the Blue Cross NC board. Blue Cross NC will retain a separate board of trustees, the companies said.
The two not-for-profits said that a formal acquisition will not occur and there will be no financial payout between the two companies, according to the Wall Street Journal. The tax structures of the two companies will not be changing either.
The deal will be subject to regulatory approval in North Carolina, Oregon, Washington, Idaho and Utah. Cambia’s health plans include a network of Blue Cross insurers in Oregon, Washington, Idaho and Utah. The companies said the health plans will remain locally led and separate.
The two companies have worked together previously, forming Echo Health Ventures, which invests in health care companies.