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SIOUX FALLS, S.D. (AP) — Regional health system Avera Health announced Thursday that it plans to buy the Dakotacare health insurance company, creating what it said would be the second-largest health insurer in South Dakota.
The two Sioux Falls-based companies said customers wouldn't experience any change in service or access to hospitals, pharmacies or doctors. Avera said the deal allows it to expand its insurance to cover not only its facilities, but to offer choice-base plans, which allow patients to choose any heath care provider in the state.
No purchase price was disclosed, but the companies said the deal was expected to be finalized Nov. 30. Here are some details about the deal:
STATE'S SECOND LARGEST HEALTH INSURER
Avera, which owns 32 hospital and more than 200 clinics in a five-state region, has been in the insurance industry though its insurance arm, Avera Health Plans, since 1999. Dakotacare, created by doctors in 1986, is the health care plan of the South Dakota Medical Association.
Together, the companies will serve nearly 200,000 members, marking the state's second largest health insurance company behind Wellmark Blue Cross and Blue Shield of South Dakota, according to Avera.
Avera plans to operate Avera Health Plans and Dakotacare as separate organizations, allowing it to offer South Dakota residents a variety of options and price points, said Rob Bates, senior vice president of Avera Health.
Kevin Bjordahl, Dakotacare's board chairman, added: "For Dakotacare subscribers, nothing will change."
South Dakota Department of Labor Secretary Marcia Hultman, whose agency oversees the Division of Insurance, said she doesn't anticipate any great impacts to health insurance competition.
"Avera has indicated it is committed to maintaining the Dakotacare brand, its network and agent relationships," she said.
HEALTH CARE ACT CHALLENGES
Dakotacare began discussions with Avera after its board realized it would be beneficial to partner with a larger health care system, especially after the federal health care law took effect.
The company announced in October that it could no longer afford to offer individual polices through the federal health insurance marketplace. Bjordahl said there have been instances in which people have walked into a hospital, signed up for insurance and used services for a major disease, and then stopped paying their premiums after being discharged.
"These challenges of the Affordable Care Act have made it necessary to partner with somebody bigger," Bjordahl said.
COMPANY CHANGES?
Bates said there were no immediate plans for staffing changes within the two insurers, which each employ about 120 people. But he said Avera will look for efficiencies, saying: "We probably don't need two of everything."
Bates said he doesn't know how that may affect future staffing, but he said Avera is a large, diverse system that would have sufficient opportunities for anyone affected by structural changes.
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