- Tufts Health Plan and Harvard Pilgrim Health Care plan to merge. If the deal is approved by state and federal regulators, the combined organization will become one of the region's largest health insurers, the two nonprofit payers announced Tuesday.
- The combined company will serve 2.4 million members in Massachusetts, Maine, Connecticut, New Hampshire and Rhode Island, offering a variety of health plans for employers, Medicare and Medicaid beneficiaries and people purchasing insurance on the Affordable Care Act marketplaces.
- The plan to create a still-to-be-named organization is the second attempt by Tufts and Harvard Pilgrim to combine. They called off a potential merger in 2011.
The deal is another example of M&A activity among payers, which have pursued both horizontal and vertical mergers in recent years.
Providers and insurers, for example, often join forces to increase efficiencies, provide seamless care for patients, and, in some instances, increase market dominance. Both Tufts and Harvard Pilgrim have pursued vertical deals.
Tufts last year teamed up with Hartford HealthCare, which operates six hospitals across Connecticut, to create a health insurance company, CarePartners of Connecticut, which sells Medicare Advantage plans.
Before then, the health plan aligned with Granite Health to launch the Tufts Health Freedom Plan in New Hampshire.
Meanwhile, Harvard Pilgrim was reportedly in merger talks last year with Partners Healthcare, the largest health system in Massachusetts, which includes such big-name Harvard University teaching facilities as Massachusetts General Hospital and Brigham and Women's Hospital.
In the deal announced Tuesday, top officials from Harvard Pilgrim and Tufts said the new organization will focus on tackling such issues as affordability, access, quality and fragmentation in the delivery of healthcare services.
Joyce Murphy, who currently chairs the Harvard Pilgrim board, will lead the new board of directors, which will be equally divided among representatives from both organizations.
Tom Croswell, president and CEO of Tufts, will serve as CEO of the new organization. Harvard Pilgrim CEO and President Michael Carson will serve as president.
The agreement was unanimously approved by both boards.
Another recently announced horizontal deal among payers is Centene's $17-billion acquisition of rival WellCare, which shareholders of both companies overwhelmingly approved earlier this year. The Centene-WellCare deal still needs regulatory approval from several states. Alabama, Arkansas and Kentucky have conditionally approved the deal. Missouri has given the green light if the combined company sells Missouri Care, a WellCare unit.