Catholic Health system OKs deal for insurer QualChoice
Posted: April 3, 2014 at 5:12 a.m.
A wholly owned subsidiary of Catholic Health Initiatives, parent of Little Rock based St. Vincent Health System, announced Wednesday that it has reached a stock-purchase agreement to acquire QualChoice Holdings Inc.
One of the nation’s largest nonprofit health systems, Denver-based Catholic Health Initiatives operates St. Vincent Health System in Little Rock, and now Mercy Hospital in Hot Springs.
The system’s news about its plan to buy QualChoice came one day after it announced that it had bought Mercy Hospital, a Catholic institution that had been owned by Mercy Health System of St. Louis.
QualChoice Holdings, based in Little Rock, is the parent company of QCA Health Plan Inc., and Qual-Choice Life and Health Insurance Co. Inc. It is a distant second to Blue Cross and Blue Shield of Arkansas in market share.
The proposed acquisition for an undisclosed amount is subject to final regulatory approval by the Arkansas Insurance Department.
After the department receives the application, a public hearing will be conducted, Insurance Commissioner Jay Bradford said Wednesday.
“CHI, through St. Vincent Health System, has been a partner with QualChoice since our inception and we are excited to now be a part of a national organization of such high quality,” Mike Stock, chief executive of QualChoice Holdings, said in a news release. “We have always had an excellent relationship with St. Vincent and look forward to working as part of Catholic Health Initiatives in the future.”
Stock said that QualChoice has about 150 employees and that he expects the number to grow.
QCA Health Plan is a health-maintenance organization created in 1996 and licensed in all 75 Arkansas counties.
QualChoice writes coverage in five of the state’s seven underwriting regions defined by the Arkansas insurance exchange established to provide coverage under the federal Patient Protection and Affordable Care Act, according to Stock. If the buyout is achieved, it likely will go statewide, Stock said.
Catholic Health Initiatives has $19.9 billion in assets in 18 states, including 88 hospitals and three medical schools, Bradford has said.
“I predict they’ll expand QualChoice coverage to [other states],” Bradford said in the earlier interview.
That sentiment was echoed by Juan Serrano, a Catholic Health Initiatives senior vice president.
“We regard Arkansas as a fantastic place to develop our health insurance capabilities as we strive to better serve communities here and across the nation,” Serrano said in the release.
“Making an investment in a quality health plan such as QualChoice is integral to CHI’s population health strategies, which we believe will help improve the future of affordable access to health and well-being for the people of Arkansas and many other communities we serve,” Serrano said.
QualChoice offers abortion coverage, as long as it is warranted under one of the following reasons listed on the company’s website: the mother’s life is endangered, the pregnancy is the result of rape or incest, the fetus has been diagnosed as having a defect, anomaly or malformation deemed “incompatible with life.” QualChoice does not cover “elective termination of pregnancy,” according to its website.
Bishop Anthony Taylor of the Little Rock Diocese met with Catholic Health Initiatives officials conducting due diligence on the matter, said Michael Romano, the system’s national director of media relations. Taylor did not return messages on Wednesday.
Taylor was instrumental in blocking the proposed sale of Mercy Hospital in Hot Springs last year to Capella Healthcare, a Tennessee-based for-profit chain.
He said he was concerned that Capella might not adhere to a ban on elective abortions after an initial five-year period of ownership. The Federal Trade Commission said it would fight the sale on competition grounds.
The U.S. Conference of Bishops’ Ethical and Religious Directives for Catholic Health Care Services prohibit the use of contraceptives and related reproductive services. Some QualChoice plans offer contraception coverage including birth-control pills, vasectomies and tubal ligations.
St. Vincent has been a participant in the provider network of QCA Health Plan since its inception and an investor since 1999. Other key investors in QualChoice include TriZetto Corp., the University of Arkansas for Medical Sciences; Tenet Health System Medical Inc., Arkansas Children’s Hospital and QualChoice of Arkansas Inc.
Mark Bjornson, Catholic Health Initiatives’ vice president, commercial and government health programs, praised the work of Bradford as integral to the transaction.
Bradford said Wednesday that the department has not yet received the application,but reiterated what he has said in the past - that a public hearing would be held soon.
Bradford has said in previous interviews that the fact that Catholic Health Initiatives is one of the largest hospital chains in the country will ensure that QualChoice will be a strong operator.
No immediate changes in QualChoice operations are anticipated by the change in ownership and there will be no changes in provider network participation by any QualChoice provider investors, according to the release.
Front Section, Pages 1 on 04/03/2014