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Justice Department Shuts Down Planned Healthcare Merger

Washington, D.C. – On March 8, 2010, Blue Cross Blue Shield of Michigan and Physicians Health Plan of Mid-Michigan announced that they would end their planned merger. The two companies were expecting to have the agreement approved by the federal government by the end of last year, but the Department of Justice said that it “would file an antitrust lawsuit to block the litigation”, claiming that the sale of Physicians Health Plan to Blue Cross would have given Blue Cross of Michigan “control of nearly 90 percent of the commercial health insurance market in the Lansing, Michigan area”.

The details of the proposed agreement were signs of trouble to the Justice Department. In a press release, the department describes Blue Cross Blue Shield of Michigan as the “largest health insurer in Michigan”, Physicians Health Plan of Mid-Michigan as the “largest hospital system in Lansing”, and Sparrow Health System, which owns Physicians Health Plan, as the company that operates the “largest hospital in Lansing”. Combining these three healthcare giants into one company was too much for the Antitrust Division of DOJ to ignore. In the statement, the agency said that “competition between the two companies has led them to offer lower prices, better service and more innovative products”.

On the other hand, Blue Cross and Physicians Health Plan saw it differently. In a joint statement released the day the merger was scrapped, the corporations argued that the purchase would actually help them to keep costs affordable by “spreading administrative costs across a larger membership base for Blue Care Network”. The statement also proposed that the sale would allow parent company, Sparrow Health System, “a greater ability to focus its human and capital resources on providing quality health care to the region”.

Christine Varney, Assistant Attorney General for the DOJ Antitrust Division, said just the opposite. The press release quotes her as saying, “The merger would have likely led to higher prices, lower levels of service and decreased quality of health care for consumers.” Blue Cross and Physicians Health Plan had the option to fight the lawsuit in court, but decided that the process and fees associated with a lengthy court battle were “not in the best interests of either organization”.

In an email response to WorldNewsVine, Helen Stojic, Corporate Affairs Director and Spokesperson for Blue Cross Blue Shield of Michigan/Blue Care Network, said, “We do not intend to dwell upon the matter and have moved forward.”

Posted by on March 12, 2010. Filed under News,News and Opinions with Selena Robinson,US Business News,WorldNewsVine. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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