Dive Brief:
- Stellarus, Blue Shield of California’s sister company launched to help nonprofit plans keep up with their well-capitalized, for-profit peers, has added two new Blues plans as partners.
- Blue Cross Blue Shield of Kansas and Hawaii Medical Service Association will deploy Stellarus’ technology platform, including a comprehensive data hub backing services like member engagement and prior authorization automation, along with a digital health record, the companies announced Thursday.
- BCBS of Kansas and HMSA will take stakes in Stellarus as part of the deal and receive one board seat each at the company. A spokesperson for Stellarus declined to disclose financial terms of the deal, but said “each co-founding plan made a meaningful commitment — financial and strategic — to back Stellarus and influence its growth.”
Dive Insight:
Blue Shield of California restructured in January in a bid to shore up its finances, creating a new parent company called Ascendiun to oversee the payer, clinical services firm Altais and Stellarus.
Stellarus’ platform brings together more than 60 datasets, including clinical, claims and demographic data, into one hub to underpin tools like member communications, population health management and payment integrity, according to the company.
Stellarus also peddles Blue Shield’s novel pharmacy care model, which outsources pharmacy benefits functions to multiple vendors in a bid to lower costs.
Blue Shield — a payer that’s differentiated itself through its willingness to take big swings to curb cost growth for its 6 million members — has said its goal with Stellarus is to sell services to other Blues plans that they don’t have the wherewithal to build themselves.
Thursday’s news represents a step forward in that goal, with BCBS of Kansas and HMSA, both Blues licensees with roughly 1 million members in their respective states, joining Stellarus as early adopters.
Executives for both plans said that investing in Stellarus will help them grow their technological bench while keeping their local independence.
“Given Hawaii’s size and geographic position, we are better off if we enhance our ability to innovate and grow our technological capacities by investing in Stellarus with like-minded, mission-driven, not-for-profit health plans that are trying to accomplish the same things and solve the same problems,” Dr. Mark Mugiishi, HMSA’s CEO, said in a statement.
“By joining Stellarus, we’re investing together with other not-for-profit plans to build something new — a modern, connected system designed to make health care simpler, more affordable and more personal,” said BCBS of Kansas CEO Matt All.
A spokesperson for Stellarus added that the partnership will help the nonprofit Blues plans reduce administrative and healthcare costs to compete in a difficult landscape, especially against large national payers that have more resources to weather challenges like growing costs for members, and invest in technology to modernize their operations.
It’s a tricky time for insurers. The profitability of the industry as a whole has dropped considerably as Americans use more and pricier medical care. Health insurers’ profit margins dropped on average from 2.2% in 2023 to just 0.8% in 2024, according to the National Association of Insurance Commissioners.
Though it’s still early days for Stellarus, the company has a broad range of potential clients: 32 of the 33 independent Blues plans are nonprofit, not to mention other nonprofit U.S. insurers that may be interested in partnering on tech solutions they’re not able to build themselves.
A Stellarus spokesperson did not share additional details on client demand for Stellarus and the financial performance of the company, including whether it is profitable.
Blue Shield itself brings in more than $27 billion in annual revenue and reported $103 million in net income last year.
