PreferredOne, a health insurer based in Golden Valley has been acquired by UnitedHealthcare in a move that would help the nation’s largest insurer compete for business in its home state. According to Hayes Batson, chief financial officer of Fairview Health Services, which gained full control of PreferredOne in early 2016, the sale concluded Monday morning. The financial details were kept under wraps.
- Strategic move: The acquisition was a strategic move for UnitedHealthcare, which in 2017 announced a push for a bigger piece of the Minnesota health insurance market. Historically, PreferredOne stood as the fifth largest of the non-profit carriers in the state.
- Approval: In applying for regulatory approval, UnitedHealth Group’s chief accounting officer Thomas Roos noted United’s “limited commercial health plan presence” in Minnesota. “An acquisition of [PreferredOne] provides expansion of relationships within the state and geographic expertise, as well as create a much closer alignment with a key local partner, Fairview Health Services,” Roos wrote.
- Financial risk: PreferredOne is known for selling administrative services to employers that “self-fund” their own health plans and take on the financial risk. About 200,000 people are enrolled in such plans, said David Crosby, the PreferredOne chief executive, in an interview. Crosby said that another 50,000 people are enrolled in “fully-insured” health plans from PreferredOne, where the insurer takes the risk for the medical costs incurred by employer groups and individuals.
- Health plan: With more than 34,000 workers, Minneapolis-based Fairview uses PreferredOne to run its own employee health plan. PreferredOne also has been one of three health plan options for government workers in the state of Minnesota’s group insurance program.
- Non-profit health group: Selling PreferredOne lets the non-profit health group focus attention and capital on providing health care, Fairview’s Batson said. It also strengthens Fairview’s relationship with UnitedHealthcare as the insurer gets bigger in the Minnesota health plan market. “We’ve continued to grow, year-over-year,” Crosby said. The insurer was “able to get over what occurred in the individual market and move forward.”
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