Cigna is acquiring a hospital-owned managed care company that serves a fairly diverse customer base of employers, providers and even potential competitors.
Citing its "Go Deep" strategy, Cigna is purchasing New Jersey-based QualCare Alliance Networks, the state's largest provider-sponsored managed care company.
"This acquisition is an example of Cigna's ongoing commitment to being a partner of choice to healthcare professionals and hospital systems," said Matt Manders, Cigna's president of U.S. commercial markets and global healthcare operations.
QualCare president and CEO Annette Catino, who helped found the organization, will stay on as chief executive after the deal closes in the first quarter. Financial terms have not been disclosed.
Cigna once owned Lovelace Health System and its health plan in Albuquerque, before selling the integrated delivery network in 2002 as one of the last of the large insurers to own a hospital system at the time. The insurer's Arizona division still owns the 1,200 physician-strong Cigna Medical Group.
Acquiring QualCare, Cigna is buying a health plan that providers helped build, seeing it as a promising way to grow in New Jersey and the tri-state region.
Founded in 1993 and based in Piscataway, QualCare has been owned by 16 nonprofit hospitals and physician-hospital organizations -- including Meridian Health, Hackensack University Medical Center and Robert Wood Johnson University Hospital -- and serves 200,000 members in the self-funded health plans of health systems, unions, local governments and some private companies.
In addition to HMO, PPO and point-of-service plans, QualCare sells employers an "open access plan" that lets members coordinate their healthcare, without a primary care physician or referrals, with the choice of lower-cost in-network providers or more expensive out-of-network providers.
QualCare also has management and service contracts with other insurers, including two new health insurers -- the cooperative Health Republic Insurance of New Jersey and the New York City startup Oscar Health Insurance.
QualCare is supplying Health Republic with provider networks, customer service, medical management and claims processing, while Oscar is using QualCare's HMO network as its exclusive network partner for its foray into New Jersey's individual and small group market.
Whether those two arrangements under Cigna's ownership would be problematic, either to trade regulators or the parent corporation, remains to be seen. A payer-agnostic service and technology company owned by a large insurer is not unprecedented. Currently Cigna does not sell individual plans in New Jersey or New York, so neither Health Republic nor Oscar are necessarily competitors in that space, although all of the three do sell small group plans in overlapping markets.
Under Cigna, QualCare will continue to "offer its full suite of existing products and services," while also focusing on "locally-tailored innovations to drive customer engagement and meet personal health needs," the companies said in a media release.
Cigna said another goal with QualCare is to serve providers, offering both hospitals and physicians management services and technology solutions such as multi-tier plan administration, population analytics and clinical quality measurement.
"The era of providers relying on volume of care and illness is over," said John Lloyd, chairman of QualCare's board of directors and CEO of the Meridian Health hospital system. "The future is one of serving local communities and focusing on wellness."
Among QualCare's other businesses is Qual-Lynx, a worker' compensation managed care plan and a third-party administrator for property, casualty and workers compensation. QualCare also has an accountable care services unit called Health-Lynx that is helping 10 New Jersey hospitals participating in the Medicare Shared Savings Program.