THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, July 1, 1994 TAG: 9407010350
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: By TOM HOLDEN, STAFF WRITER
LENGTH: Medium: 80 lines
Blue Cross and Blue Shield of Virginia may become a for-profit company and begin selling stock to the public, a move that would reverse its 59-year tradition of non profitability.
The health insurer is also changing its name to Trigon Blue Cross and Blue Shield.
Changing its for-profit status and selling stock would allow the Virginia blue access to money needed to acquire companies and services to strengthen its ability to compete in a fast-changing health care industry.
``We're analyzing whether it's an appropriate thing for us to do,'' Norwood H. Davis Jr., the company's chairman and chief executive officer said Thursday.
``If we decide to proceed, we will proceed as quickly as we can.''
The option to go public follows a vote last week by the national blue cross board to allow the nation's 69 blues, which insure an estimated 67 million people, to decide if they want to become publicly held. About about dozen plans are said to be considering the move.
``We're one of the Blues that can make it happen,'' Davis said. ``This organization is financially strong and the investment community recognizes that.''
Most health care analysts believe that for large health insurance companies to survive they need to offer - not only insurance - but a means of delivering health care. That translates to acquiring new companies.
Companies which are well financed and have access to capital will be in the best position to prosper, Davis said.
``A number of our competitors and a number of other blues have purchased physician practices, or have developed staff model HMOs where the physicians are employees,'' Davis said. ``We have not purchased any practices, or any hospitals, but we'll certainly look into it.''
Other Blue Cross companies nationwide, like California Cross, Blue Cross & Blue Shield United of Wisconsin and the Associated Group of Indiana, have operated a large portion of their businesses as for profit companies, said Jim Goss, a spokesman for Virginia Blue Cross.
A fourth, Blue Cross and Blue Shield of Missouri, has filed with state and federal regulators to do the same.
A move into for-profit status would require approval from the company's 15 board members, 14 of whom are not company employees, and Davis. The board could not vote until the company had made its intentions clear with state and federal regulators.
The first hints that the Richmond-based health giant was becoming more aggressive in its drive to expand came in April when it announced the creation of a ``mergers and acquisitions'' department. Although leadership of that department remains unfilled, the company's intentions were clear.
Before that, Blue Cross had taken steps toward becoming a for-profit entity by starting a pre-paid health services plan. It also invested in for-profit subsidiaries.
The company's electronic data interchange, which handles medical claims electronically, firm is the largest in the country, operating in 25 states. But its plans to expand have not always resulted in success.
In October of 1992, the company announced plans to acquire the financially troubled Blue Cross of Washington D.C. But problems with the district's business and political concerns cut short the efforts.
The blues in Delaware, Washington, Maryland also have surfaced over the years as possible merger partners, but the talks have not produced new companies.
``We're rapidly moving into the business of managed care products, but these are expensive systems,'' Davis said.
The name change of Blue Cross and Blue Shield of Virginia Blue to Trigon Blue Cross and Blue Shield is an attempt by the company to ``have a distinctive new identify that has no geographic references,'' said Jim Goss, a company spokesman.
``We announced last year that we were planning to do this. We are creating a strong image for our existing operation. At the same time we're retaining the famous cross and shield logos of our heritage.''
The name change will have no effect on costs or coverage for any of the company's 1.8 million policyholders. Existing Blue Cross Blue Shield customer identification cards will remain valid, the company said. by CNB