WellPoint to buy CareMore Health Group for about $800 million
Cerritos healthcare provider CareMore Health Group is being acquired by health insurance giant WellPoint Inc. for about $800 million as part of an effort to bolster the insurer’s profile in senior care as baby boomers age.
CareMore runs 26 clinics in California, Nevada and Arizona and caters primarily to people on Medicare, the government health insurance program for those 65 and older.
WellPoint, based in Indianapolis, is the largest health insurer in the U.S. by membership and the parent company of Anthem Blue Cross of California, based in Woodland Hills.
The deal, announced Wednesday, will give WellPoint a boost as it competes for a piece of the fast-growing elderly care market, said Ana Gupte, an analyst with New York research firm Sanford C. Bernstein.
“They’ve purchased a company that has a strong record of managing chronic disease and clinics that specialize in caring for seniors,” Gupte said. “It makes sense that WellPoint will make an acquisition, as it’s hard to reach their aspiration in this area by growing things organically in-house.”
WellPoint rivals UnitedHealth Group Inc. and Humana Inc. have for years been tweaking their marketing and management programs to attract seniors, Gupte said. WellPoint, in contrast, has traditionally focused on providing private health insurance to companies.
“WellPoint is playing catch-up now,” she said. “Employers are finding private benefits unaffordable, and more are trying to offload retirees onto Medicare.”
WellPoint estimates that every year until 2030, about 1 million baby boomers will become eligible for Medicare in the 14 states where it offers insurance plans, company spokeswoman Kristin Binns said.
“The growth opportunity is pretty significant,” Binns said. “Seniors tend to have a high utilization of healthcare. Some have upwards of 10 chronic conditions at once, from diabetes to asthma to heart problems.”
WellPoint plans to open more clinics geared toward seniors, she said.
CareMore serves about 44,000 Medicare recipients in California and 10,000 in Nevada and Arizona.
The privately held company has about 1,200 employees. There are no plans so far to eliminate jobs, Binns said.
The deal, which is subject to state regulatory approvals, is expected to close by the end of the year.
WellPoint shares fell 41 cents to $75.52 on Wednesday.