WellPoint buying CareMore to better compete in senior market

Health insurance, pen and stethoscope

In an attempt to better compete within the senior healthcare market, WellPoint (NYSE: WLP) is purchasing Medicare specialist CareMore Health Group for $800 million, making the insurer a significant provider of medical care for seniors.

The acquisition, however, isn't about "simply buying membership," but is instead a longer-term strategic bet on an integrated approach between insurers and providers to coordinate care, WellPoint CFO Wayne DeVeydt told the Wall Street Journal. "We think this is a model that's unique," he added.

That model has been pioneered by CareMore, which runs 26 clinics in California, Nevada and Arizona catering primarily to Medicare patients, and involves intensely monitoring and treating chronically ill older patients to improve their health while preventing their medical bills from rising. The proposed deal would allow WellPoint to become more deeply involved in direct patient care, running networks of primary-care clinics for the first time, according to the Indianapolis Star.

DeVeydt says WellPoint plans to more than double the CareMore network of clinics over the next two to three years and might eventually consider using the CareMore clinical approach for other populations like Medicaid participants and commercially-insured consumers, the WSJ notes.

"The growth opportunity is pretty significant," WellPoint spokesperson Kristin Binns told the Los Angeles Times, adding that about 1 million baby boomers will become eligible for Medicare every year until 2030 in the 14 states the insurer operates. "Seniors tend to have a high utilization of healthcare. Some have upwards of 10 chronic conditions at once, from diabetes to asthma to heart problems."

While UnitedHealth and Humana have worked to attract seniors, WellPoint has been focusing on providing private health insurance to companies. "WellPoint is playing catch-up now," Ana Gupte, an analyst with Sanford C. Bernstein, told the LA Times. "Employers are finding private benefits unaffordable, and more are trying to offload retirees onto Medicare."

The deal is expected to close by the end of the year, be neutral to 2012 earnings and add to profits in 2013 and beyond, the insurer said in a statement.

To learn more:
- here's the WellPoint press release
- read the Wall Street Journal article
- see the Los Angeles Times story
 

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