McLaren Health Care to acquire Indiana insurer MDwise

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McLaren Health Care will expand its insurance business.

McLaren Health Care is expanding the reach of its health plan into Indiana by acquiring the nonprofit HMO MDwise.

The deal was announced as provider-sponsored health plans face a number of struggles in the insurance market. Research from the Robert Wood Johnson Foundation found that of 42 insurance companies created or acquired by health systems since 2010, just four were profitable by 2015. 

Provider-led healthcare networks are often ill-equipped to make it in the insurance business and may not accurately price insurance products. Despite the risks, some big names on the provider side, including the Cleveland Clinic, have recently jumped into or expanded their insurance offerings. 

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RELATED: Cleveland Clinic enters Medicare Advantage market with Humana partnership 

MDwise generates more than $1.5 billion in revenue, according to Michigan-based McLaren. When the purchase is finalized, the health system's annual revenue is projected to exceed $6 billion. The acquisition is still subject to a state and local regulatory review and is expected to be complete by Dec. 31.  

MDwise has more than 360,000 enrollees throughout Indiana, which will bring McLaren's total number of health plan enrollees to more than 620,000 when the deal is done, according to the announcement. 

"This expansion allows us to leverage the success and strength of our health plan expertise, and brings significant benefits to the individuals and families served by MDwise," Philip Incarnati, McLaren's CEO, said in the announcement. 

Incarnati said the growth of McLaren's health plan allows the system to build scale and to share data and best practices, to the benefit of patients and providers in both states. 

RELATED: 5 reasons provider-sponsored health plans are poised for a comeback 

MDwise members will not see changes to their plans or their provider network once the deal goes through, according to the announcement. MDwise made the decision earlier this year to seek out a buyer with core capabilities that include "managed risk-bearing entities." 

Jim Parker, CEO of MDwise, said that McLaren was the "ideal choice." 

"With their strong track record operating a successful health plan in Michigan, they have the expertise needed to assist MDwise to succeed in a rapidly changing managed care market while maintaining a high level of service to our members and provider partners," Parker said. 

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