HealthPlus sold its Medicaid book, rebounded $41M, and merged with Health Alliance

HealthPlus, a Michigan nonprofit health plan, spent two years in significant losses before rebuilding itself by shrinking. It sold its 90,000-member Medicaid business to Molina Healthcare for an undisclosed amount and, on the smaller remaining book, achieved a $41 million turnaround, Crain's Detroit Business reported. 'It put us in a position to find a great health partner with HAP,' former HealthPlus CEO Michael Genord said.

The rebound set up the exit from independence. In November 2015 HealthPlus and Health Alliance Plan (HAP), Detroit's nonprofit insurer, signed a letter of intent to merge; in early February 2016 the deal cleared state and federal regulators and the two officially merged. The combined plan insures an estimated 650,000 people and employs about 1,300, with HealthPlus bringing roughly 75,000 members to the combination.

The pairing was also growth logic for HAP, which expected the merger to facilitate its expansion into mid-Michigan. HealthPlus employer groups move to HAP as their coverage renews and individual members transfer during the next open enrollment, and HAP said it was optimistic about its operations for the year.

A $41M turnaround after two loss years; merger completed Feb 2016, combining into a plan insuring an estimated 650,000 people with about 1,300 staff

Two years of significant losses left HealthPlus unable to stand alone; selling the 90,000-member Medicaid line cut away the business it could no longer fund.

The $41M turnaround restored profitability first, so HealthPlus negotiated the merger as a healthy partner rather than a distressed seller.

For HAP the merger bought expansion into mid-Michigan and scale of roughly 650,000 insured members without buying a broken book.

Divest the bleeding line before you shop the company — HealthPlus only became a mergeable partner after selling Medicaid and proving the remaining book made money

The merger closed in early February 2016 after final approval from state and federal regulators. HealthPlus employer groups were to move to HAP as their coverage renewed and individual members during the next open enrollment. HAP expected the merger to facilitate expansion into mid-Michigan and said it was optimistic about its operations for the year. The source records no results beyond these transition plans.