Highmark seeks to buy Gateway Health; deal looks to add 355K insurance members

Highmark Health’s insurance arm looks to grow by more than 350,000 members if state regulators approve a proposed deal to acquire sole ownership of Gateway Health.

The acquisition instantly would expand Highmark’s insurance rolls from 6 million to 6.355 million members, a nearly 6% increase.

For nearly three decades, Highmark Inc. has owned 50% of Gateway. It’s headquartered a few blocks from Highmark’s corporate high-rise in Downtown Pittsburgh. The remaining 50% of Gateway has been owned by Livonia, Mich.-based Trinity Health, whose provider network spans 90 hospitals and other services across 22 states.

Gateway offers Medicaid, Medicare and dual-eligible coverage across Pennsylvania.

On Wednesday, Highmark and Trinity submitted the acquisition agreement they inked to the Pennsylvania Insurance Department. The agreement still is subject to approval by state regulators.

A spokesperson for the Pennsylvania Insurance Department could not immediately be reached.

The two affiliates have been eyeing the acquisition for months, according to Highmark spokesman Aaron Billger.

“We have long contemplated full ownership of Gateway Health in collaboration with Trinity on the next generation of Gateway,” Billger said. “The timing was right, and the two organizations agreed.”

The deal’s financial terms have not been disclosed .

If approved as submitted, the transition to making Highmark the sole owner of Gateway Health will not result in any layoffs or eliminations of employee positions, according to Billger. Gateway will continue to operate with existing employees as an independently operated, wholly owned subsidiary under the Highmark corporate umbrella, though a new board will be appointed to oversee it.

“Service to Gateway members, participating health care professionals and key partners will remain unchanged,” Billger said.

“If Highmark becomes the sole owner of Gateway, the two companies will work together more closely to deliver excellent member outcomes through the combined capabilities and innovations at both organizations,” Billger said. “Gateway’s long history of offering Medicaid and Medicare programs that go beyond doctors and medicine to deliver whole person care will be complemented by Highmark’s Living Health model that is focused on simplifying health care by re-engineering the delivery model.”

The search continues for Gateway’s next chief executive.

Karen Hanlon, Highmark Health’s chief operating officer, has been serving as interim CEO of Gateway Health since the recent departure of former Gateway CEO Cain Hayes. Hayes was hired in June as CEO of the Massachusetts-based Harvard Pilgrim Health Care and Tufts Health Plan. He was set to begin the new role on Tuesday.

Highmark’s proposed acquisition of Gateway comes just a few months after Highmark’s affiliation with HealthNow New York Inc. became effective. The newly affiliated organization — which expanded Highmark’s reach to four states — has been rebranded Highmark Blue Cross Blue Shield of Western New York and Highmark Blue Shield of Northeastern New York.

“The affiliation brings Highmark health plan membership to more than 6 million people — making it the fourth largest Blue Plan in the nation — and will add to Highmark’s strong financial position,” Highmark officials said when announcing the affiliation’s official completion in March.

Highmark also has members in Delaware and West Virginia.

It added more than 500,000 insurance plan members when it merged with Blue Cross of Northeastern Pennsylvania in 2015.