A multibillion-dollar deal is dead.
Days after Blue Cross N.C. made national headlines for concealing the arrest of its CEO Patrick Conway, the state’s largest insurer gave up Friday, Sept. 27, on a $16-billion affiliation with its Pacific Coast counterpart, Cambia Health Solutions.
Police arrested Conway in June on charges of drunken driving and misdemeanor child abuse. When news of the arrest broke in late September, both Blues plans decided to put the deal on hold.
A day after Blue Cross N.C. announced Conway’s resignation, both companies withdrew their applications for regulatory approval, effectively jettisoning the deal.
The affiliation was a bold gambit.
Even in today’s rush of health care consolidation, the scope of the deal was arresting. Its size alone attracted national attention, and the physical distance separating the plans — more than 2,000 miles — made the affiliation unique.
Together, the two Blues would have stood as a $16 billion giant covering 7 million people across five states.
But the entire deal hinged on Conway. He would have presided over both companies, taking over as CEO of Cambia Health Solutions and maintaining his leadership at Blue Cross N.C.
Conway was one of the so-called stars of the Obama era. He had built a reputation as a cost-cutting innovator: he held two directorships at the Center for Medicaid and Medicare Innovation, shaping the health care of more than 100 million people. And at Blue Cross N.C., he presided over an ambitious transition to value-based care, in which he attempted to pay for health instead for health care services.
But after details of the police report leaked into the news, Cambia began pulling back. It said it was “deeply troubled by the emerging details of the situation,” and emphasized how “transparency and integrity of leadership are imperative to Cambia.”
The deal had also faced potential resistance from state regulators, who chastised BCBSNC and Cambia for failing to inform them of Conway’s arrest for months. Regulators in several states said they would consider the delay when reviewing the potential affiliation.
“These facts constitute a material change in the affiliation application that was pending before our states,” said Brad Hilliard, Oregon Division of Financial Regulation spokesman.