Published in Health Care

Deal could make Priority Health stronger in SE Michigan

BY Sunday, September 01, 2019 06:11pm

GRAND RAPIDS — Acquiring a Detroit-based HMO gives Priority Health a greater market presence in Southeast Michigan.

The member-owned Total Health Care Inc. would become a wholly owned subsidiary of the Grand Rapids-based Priority Health, Michigan’s second-largest health plan behind Blue Cross Blue Shield of Michigan

Left: Lolli, Right: Budden COURTESY PHOTOS

The deal comes 12 years after the Grand Rapids-based Priority Health first entered the Detroit-area market with the acquisition of the former CareChoices HMO from Trinity Health. Since then, Priority Health has grown steadily in the Southeast Michigan market, where it presently has nearly 160,000 members and has grown 63 percent alone in the last five years.

The deal for Total Health Care continues building that presence and could make Priority Health a stronger competitor in the market, said Marti Lolli, chief marketing officer at Priority Health.

As of 2017, Blue Cross Blue Shield holds a two-thirds market share in the Detroit-area metropolitan statistical area, according to a health insurance market share report issued annually by the American Medical Association. Health Alliance Plan was second with a 17-percent market share.

“We believe competition is good and (Detroit) is one of the least competitive markets in the country … in terms of insurance options. We think that consumers are looking for something different and new and innovative, and we can serve that gap that they have,” Lolli said.

Holding a larger share of the Southeast Michigan health insurance market would give Priority Health a broader membership base when working with care providers to improve quality and control costs.

“We believe we can change the way care is delivered with our provider partners and if we don’t have relevance in the market, we’re not able to be successful in that,” Lolli said. “We’re already there, so we need to increase our relevance. The number of people that have Priority Health ID cards needs to go up so we can continue the partnerships we have with the outstanding hospitals and physicians that service our members.”

The deal should close in early 2020, pending approval by state regulators and Total Health Care members.

Terms of the deal were undisclosed, although the Grand Rapids-based Priority Health agreed to establish a $25 million foundation to support health initiatives in the Detroit area.

“I have a great deal of respect for the leadership team at Total Health Care and the business that they have built,” Priority Health President and CEO Joan Budden said in a statement. “Throughout my long career in the region and as a Detroit native, I’ve seen first-hand their passion for serving their members and their commitment to the Detroit community.”

Between its two health plans as of June 30, Total Health Care had more than 92,000 members in Wayne, Oakland, Macomb, Genesee and portions of Monroe County who were enrolled in individual, group and Medicaid HMO policies.

Total Health Care is particularly strong in the Medicaid market with more than 50,000 enrollees. Should Michigan ever look at limiting the number of health plans participating in Medicaid, as other states have done, “we wanted to make sure we were positioned well as a strong statewide offering with experience in the two most significant metropolitan areas, Grand Rapids and Detroit,” Lolli said.

Total Health Care’s two health plans had combined recorded midyear revenue of $383.5 million and $17.1 million in net income, according to a quarterly financial report filed with state regulators.

The health plan will continue to operate with its existing staff and leadership team.

“This partnership with Priority Health, one of Michigan’s leading health insurance plans, will provide Total Health Care with additional resources and stability, and allow us to continue to provide our members with the quality care they have come to expect from Total Health Care at a price they can afford,” said Total Health Care CEO Randy Narowitz, who called the deal “a great fit for both companies.”

Priority Health has about 830,000 members statewide across all products lines. Grand Rapids-based health system Spectrum Health owns a 93.9-percent stake in Priority Health. Munson Healthcare in Traverse City owns 5.5 percent and McLaren Northern Michigan in Petoskey owns a 0.6-percent stake.

As of midyear, Priority Health’s commercial HMO business had 537,575 members with total revenue of $1.7 billion and $116.7 million in net income, according to quarterly report filed with the state. The Medicaid HMO Priority Health Choice Inc. had 118,742 members with $203.7 million in total revenue through the first six months of 2019 and $16.8 million in net income.

Read 2736 times Last modified on Wednesday, 04 September 2019 16:21
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