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Anthem/WellPoint merger gets DOJ seal of approval

Patient Financial Services Weekly Advisor, March 19, 2004

The Department of Justice (DOJ) announced March 9 that the proposed purchase of WellPoint Health Networks by Anthem, Inc. would not have a negative impact on competition or consumers.

According to a DOJ release, "WellPoint's share in the markets in which they overlap is very small, and these companies are not particularly close competitors."

DOJ late last month decided not to block Anthem's purchase of WellPoint, and the Federal Trade Commission (FTC) has closed its antitrust investigation into the merger.

Indianapolis-based Anthem last October announced an agreement to purchase WellPoint, based in Thousand Oaks, CA, for $16.4 billion in cash and stock. The combined company, which would use the name WellPoint and serve nearly 26 million medical members, would operate as a Blue Cross or Blue Cross Blue Shield licensee in 13 states.

Insurance commissioners in the 13 states in which the plans operate will conduct reviews of the merger in the coming months, to be followed by shareholder votes at the two companies.

WellPoint and Anthem expect to close the deal in mid 2004.

Martin Brutscher, senior vice president/principal at McBee Associates, a healthcare financial and management consultancy in Columbia, MD, says health care providers may feel some impact of industry consolidation.

"I think some hospitals are concerned that as these insurers reach critical mass, they will be able to demand higher discounts in their contracts with providers," Brutscher says. "Providers may have no choice but to accept those rates or risk losing significant volumes associated with those payer members being referred to hospitals who accepted the new contractual terms."

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