Published: Friday, June 29, 2001 5:00 a.m. EDT
Blue Cross paying $202 million for rival
By DAVID RANII, Staff Writer
CHAPEL HILL -- Blue Cross and Blue Shield of North Carolina has disclosed that it is paying $202 million to acquire rival Partners National Health Plans.
Chapel Hill-based Blue Cross, the state's largest health insurer, announced the Partners acquisition last week but declined to reveal the sale price. On Thursday, however, the company disclosed details of the deal in a filing with the state Department of Insurance.
Blue Cross intends to pay Partners' corporate parent, Novant Health, $102 million in cash. The remaining $100 million will be paid over 10 years at a 6.97 percent annual interest rate.
Partners has about 280,000 HMO members in North Carolina and more than 400,000 members overall -- and is performing better financially than most hospital-owned HMOs.
Partners eked out a profit of $21,393 on revenue of $623.4 million last year. It would have been much more profitable if not for a one-time loss of $6 million related to a Triangle physicians practice that filed for bankruptcy last fall. Partners posted a profit of $8.1 million in 1999.
As part of the acquisition, Blue Cross will obtain all of Partners' real-estate holdings, which include its 78,000-square-foot headquarters building in Winston-Salem as well as more than 12 acres of land split between the headquarters site and a second location.
Blue Cross also said that Partners has stockholder equity -- total assets minus total liabilities -- of nearly $70 million. A New York investment banking company, Cain Brothers & Co., advised Blue Cross on the deal.
Novant, which has headquarters in Winston-Salem and Charlotte, runs hospitals, physician practices and outpatient facilities in Western North Carolina.
Because Partners is a for-profit business, the sale to Blue Cross has heightened speculation that Blue Cross is gearing up to convert to for-profit status. Blue Cross is a not-for-profit organization. The companies have said they expect "minimal" changes to the work force.
Blue Cross reiterated Thursday that Partners will operate as a subsidiary that continues to offer the same benefits to customers. The acquisition is expected to close this fall, pending approval from the state DOI and federal regulators.
Staff writer David Ranii can be reached at 829-4877 or email@example.com
Hmn. Isn't Highmark BC ( Western PA) also considering for-profit status? WE need to seriously look at healthcare companies NOT being able to that MILLIONS in profits yearly while some "customers" go without needed care. My 2 cents. Karen