Dive Brief:
- Connecticut-based insurance giant Cigna has announced an agreement to purchase Piscataway-based QualCare, the state's only hospital-owned source of health coverage, for an unnamed amount. The combined company will become one of the largest insurers in the state of New Jersey.
- QualCare Alliance Networks Inc. has played a unique role in New Jersey for the past 22 years by being owned by hospitals and providing health insurance coverage for New Jersey residents. Today it oversees self-insured health plans that are known for their association with local hospitals and physicians, providing members with a large provider network.
- While self-funded insurance plans differ from traditional ones and Qualcare will longer be owned by hospitals, QualCare will continue its current operations as a subsidiary of Cigna. The combined company will cover nearly 700,000 customers in the state.
Dive Insight:
Cigna's expansion into New Jersey is obviously good for competition, but more interesting is the fact that the insurance giant is going to maintain Qualcare's business model of tight relationships and large networks. What's more, the merger gives Qualcare the momentum to expand nationally. Annette Catino, QualCare's CEO, said the move gives the once-smaller insurer the opportunity to build similar hospital-based plans in other states, as well as expanding their reach to New Jersey employers that have large numbers of employees in other states.
Linda Schwimmer, vice president of the New Jersey Health Care Quality Institute, believes that the ripple effect of the deal could be significant.
"I think that the impact of the announcement obviously remains to be seen, but it has the potential to be disruptive to the market," Schwimmer said. "Cigna nationally has been a leader in the accountable-care-organization work. To the extent that this purchase accelerates that work, it has a lot of potential for change in New Jersey."