Avera Health To Purchase DAKOTACARE
Avera Health is buying insurance organization DakotaCare. Company leaders are not revealing the purchase price. Talks started two weeks ago, and representatives for both entities could reach a final deal by the end of this month. Leaders say customers and employees likely won’t notice changes in the short term.
The board chair for DAKOTACARE says health insurance reform can be good for consumers but difficult on insurance companies. Doctor Kevin Bjordahl says sometimes making insurance affordable for a patient puts a strain on insurance providers.
“We’ve had some instances where patients have gone to a health care facility to get care, and they’ve had bad diseases or bad conditions, and they’ve been walked into a room with a computer and signed up for insurance on the spot and utilize a lot of health care,” Bjordahl says. “And then the month after they’re out, they quit paying their premium, and they’ve utilized a lot of care that the insurance company has to pay and then there’s no way of recovering any of that.”
Bjordahl says DAKOTACARE offers health plans with doctors and clinics across health systems, and the company can benefit from Avera Health Plans which covers a smaller provider network.
DAKOTACARE is becoming part of Avera Health, but the proposal includes running DAKOTACARE and Avera Health Plans as separate organizations. Bjordahl says people who have health insurance with DAKOTACARE maintain the same insurance.
"For the DAKOTACARE subscribers, nothing will change. Everything will be exactly the same. There’s no change in their claims processing or the availability of providers or their or pharmacies or anything else. It’s completely seamless. Down the road there may be more options available, but that remains to be worked out," Bjordahl says.
A leader at Avera says customers and the company benefit by keeping both versions of insurance plans. Rob Bates is Senior Vice President of Avera.
"DAKOTACARE offers a product line that is built around again that open access like we talked about with everybody in the state in the network, and that appeals to certain customers and that has certainly a following in the state, and we wanted to be able to preserve that choice," Bates says. "Likewise we think it’s important to offer the choice that Avera Health Plans does for a value-based network, a bit more narrow network at a lower price point, so the customer can choose what product best fits their needs."
Bates says each insurance company has about 120 employees. He says it’s too early in the process to know what buying DAKOTACARE means for jobs.
“With two insurance companies, we’re going to have to look at efficiencies between the organizations, and I’m sure we’ll find in ways that perhaps aren’t obvious to the consumer that we can achieve efficiencies and synergies between the two organizations,” Bates says. “We probably don’t need two of everything that we have, so we can’t really speculate on what impact that has on employment.”
Bates says Avera Health is a large organization, so he says opportunities exist within the company if the insurance divisions eliminate jobs.
Together Avera Health and DAKOTACARE serve nearly 200,000 insurance customers. With DAKOTACARE, Avera becomes the second-largest health insurer in South Dakota.