In its original application to state officials, BCBSMT stated it wanted to partner with another BCBS plan to capture economies of scale and compete with national health plans entering the market. The application also makes clear that HCSC's NIO status played a key role in BCBSMT's decision to partner with the insurer.
Paul Keckley, Ph.D., executive director for the Deloitte Center for Health Solutions, is not surprised at HCSC's move to acquire BCBSMT. He says mergers and acquisitions "in the Blues family" is common, and is expected to accelerate.
Deloitte took an in-depth look at the merger and acquisition transactions among health plans. The 10-page report shows no clear path to positive post-deal results.
The report's authors studied 44 M&A contracts 2006–2012. It took into account several balance sheet metrics, including price per share (PPS) of the acquiring company. The PPS was looked at three different times: when a deal was announced, a year after the announcement, and three years post-transaction.
Since the M&A cycle varied among the 44 companies, the number of plans included in the results varied. But among the key findings is 55% of the M&A deals had an immediate increase in (PPS); 36% of the acquiring plans had an immediate decrease in PPS, and 9% had no change. While there were more increases in PPS overall, the average value increase was measly at just one-tenth of 1%.
In Montana, the clock is ticking.