CareOregon Is Becoming Part Of Providence
CareOregon, the largest insurer of Medicaid patients in the state, is becoming part of the multistate, multi-billion-dollar Providence Health & Services system, under a proposal the two nonprofits announced Tuesday morning.
Portland-based CareOregon, which has struggled in recent years to stem financial losses, appears to be seeking stability and economies of scale by becoming a subsidiary of the much larger organization. Meanwhile, Renton, Wash.-based Providence would gain CareOregon’s experience in running Medicaid and other insurance programs. CareOregon currently insures about 312,000 Oregonians, mostly members of the Oregon Health Plan, but also Medicare and tribal members.
Providence runs a number of health insurance plans and currently insures about 650,000 people, the great majority of them in Oregon.
By partnering, CareOregon and Providence would jointly provide health insurance for nearly a quarter of Oregon’s 4.2 million population.
The two said they had signed a “letter of intent to affiliate.” They did not provide a copy of the letter. In the release, they said CareOregon “will join the Providence St. Joseph Health organization,” which oversees the entire Providence Catholic-based system.
“CareOregon and its affiliates will retain their locally based, secular and nonprofit status,” the news release added.
Providence “will provide resources and support to CareOregon,” the release said.
Eric Hunter, CEO of CareOregon, said the affiliation will help position CareOregon for serving members.
Under the arrangement, CareOregon will retain its board but Hunter will also report to a manager in Providence. CareOregon and Providence said they will alert government entities they work with to the proposal. The news release said the two organizations need regulatory approvals but did not provide specifics.
Mike Cotton, CEO of the Providence arm Providence Plan Partners, said the move is part of Providence’s focus on “identifying strategic relationships that will allow us to deliver quality health care services in new and innovative ways.”
The organizations hope to complete their new structure by January.
In June, the two companies announced they were teaming up as partners in Health Share of Oregon, the Portland-area’s Medicaid insurer. The reorganization made CareOregon the main administrator of Health Share, which serves one-third of the state’s Medicaid population as the sole Portland-area insurer. The Oregon Health Authority earlier this year tentatively approved a bid by Trillium Community Health Plan, part of Centene Corp., a Fortune 500 company, to also offer Medicaid in the Portland area
CareOregon, with about 850 employees, specializes in managing coordinated care organizations that insure Oregon Health Plan members. Besides Health Share, it runs two other coordinated care organizations: Columbia Pacific in the Columbia County area in the northwest corner of the state and Jackson Care Connect in the south. It also insures about 12,000 Medicare recipients.
Its employees range from claims processing and customer call center staff to regional care teams and pharmacy benefit managers.
CareOregon has about $1.4 billion a year in revenues, mostly federal and state money that pays for medical services for low-income members.
CareOregon has accumulated large financial reserves, topping $300 million according to the most recent figures available. But it has been hit by losses - $10 million in 2016, $55 million in 2017, $9 million in 2018, and an anticipated $10 million this year.
The agency said the losses were due in part to reductions in payment rates from the government, and the “redetermination” process in which members are screened to see if they continue to qualify for government-paid insurance.
The agency’s “financial success through the last decade allowed us to weather the down years,” said Jeremiah Rigsby, CareOregon’s chief of staff.
CareOregon and its board “will retain specific rights to manage its finances and investments under the proposed structure,” the two entities said.
Providence, meanwhile, is a massive and sprawling system, employing more than 111,000 people at 51 hospitals and nearly 1,000 clinics across seven states in the West, including Oregon, where it has eight hospitals.
The health care provider is Oregon’s second-largest employer, with an estimated 18,300 workers in the state, behind Intel with about 20,000 workers, according to recent news reports.
Providence has a large health insurance business, Providence Health Plans, based in Beaverton, that offers Medicare, Medicaid, commercial insurance and insurance for individuals and families.
For 2018, Providence reported a loss of $445 million on revenues of $24 billion. The previous year, it had a profit of $780 million on revenues of $23 billion.
The proposed affiliation comes at a tricky time for CareOregon’s Medicaid business. Later this year the state will begin apportioning members between Trillium and Health Share. The metro market - Multnomah, Clackamas, and Washington counties – has about 310,000 Medicaid members funded by $1.5 billion-plus a year in government payments.
You can reach Christian Wihtol at [email protected].