GRAND RAPIDS — The merger between Priority Health and Detroit-based HMO Total Health Care Inc. heads to a close in the new year after receiving state regulatory approval.
Priority Health said late Thursday that the Michigan Department of Insurance and Financial Services (DIFS) had signed off on the deal. The regulatory approval follows prior backing from Total Health Care members who overwhelmingly backed the merger.
“We are pleased with the support this exciting new partnership has already received from the Detroit community, current Total Health Care members and now industry regulators,” Priority Health President and CEO Joan Budden said in a statement. “With this approval from DIFS, we remain on track to complete this agreement by Jan. 1, 2020 that will bring together two of Michigan’s longest-serving and most highly-ranked health plans.”
Both companies will continue to operate independently and maintain separate brands after the deal closes. Total Health Care will concentrate on providing health plans in Detroit and surrounding communities.
Priority Health and Total Health Care also plan to create a $25 million foundation aimed at improving health in the Detroit area.
Between its two health plans, Total Health Care had more than 91,000 members enrolled in individual, group and Medicaid HMO policies in Wayne, Oakland, Macomb, Genesee and portions of Monroe County as of Sept. 30. Total Health Care’s two health plans had combined midyear revenue of $304.2 million and $17.1 million in net income, according to a quarterly financial report filed with state regulators.
Priority Health has about 830,000 members statewide across all product 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.
Through the third quarter, Priority Health’s commercial HMO business had 540,040 members with total revenue of $2.54 billion and $158 million in net income, according to a quarterly report to the state. The Medicaid HMO Priority Health Choice Inc. had 123,955 members with $303.2 million in total revenue through the first nine months of 2019 and $24.6 million in net income.