SCAN Group and CareOregon have agreed to join forces in 2023 as a new organization called HealthRight Group. The new nonprofit will combine SCAN’s Medicare portfolio with CareOregon’s predominantly Medicaid health plans.
Post-closing, HealthRight will launch a diversified business unit that integrates existing assets from both organizations, with a heavy emphasis on home-based care for seniors and underserved populations.
“A lot of the pieces just started to fall into place. The legacy SCAN would become the Medicare division of the company. CareOregon has been phenomenal at Medicaid. As one of the most renowned not-for-profit Medicaid organizations, they are going to lead the Medicaid division,” Jain told Hospice News. “And [both organizations] had a number of assets that would come together in a diversified business unit and sell services back to the plans, as well as to other like-minded plans and medical groups across the country. That’s the vision that came up with together.”
The seeds of this agreement were planted about two-and-a-half years ago, around the time that SCAN Group CEO Dr. Sachin Jain took the helm at that organization in July 2020. His very first meeting on his first day on the job happened to be with CareOregon’s top executive Eric C. Hunter.
From that initial encounter, the two leaders saw clear affinities between their organizations. Jain said that SCAN’s interactions with CareOregon felt like “talking to cousins” that “shared the same organizational DNA” in terms of their mission, vision and values.
Another linchpin of the budding relationship was Colleen Cain, the former CEO of Concera Corp., and Benova Inc., who is a board member for both SCAN and CareOregon. In addition, SCAN’s board chair Dr. Linda Rosenstock became a strong collaborator with Damien Hall, her counterpart at CareOregon.
These connections fostered frequent communication between the two nonprofits that germinated the agreement announced today.
‘A compelling nonprofit player’
HealthRight’s nonprofit status can help “create a different kind of culture of decision-making,” that will be distinct from the organization’s for-profit competitors, who are often beholden to shareholders, Jain said.
“I’m not somebody who believes that not-for-profit is intuitively good and for-profit is bad. You have plenty of not-for-profit organizations that act like for-profits and [vice-versa], but what I can say about these two organizations together is that their cultures are special. We on the margins will always make the decision that’s going to be right for the member — that’s going to be right for the community.”
Even with nonprofit status, growth will be a centerpiece of that culture. In Jain’s thinking, people will want to join plans that offer a well-designed product that prioritizes patients and their communities — thus becoming the plan of choice. The opportunity to bring quality health care to more members makes growth an “ethical imperative,” Jain told Hospice News.
As the prospect of the combination started to bloom, the SCAN term broached the idea in a letter to CareOregon leadership. This began a series of discussions that to document that sketched out the vision for HealthRight and its potential differentiators from the for-profit giants in the space.
Few would consider SCAN or CareOregon to be small companies. When combined as HealthRight, they expect revenues of $6.8 billion and will serve nearly 800,000 health plan members through Medicare and Medicaid managed care offerings.
But comparatively, the metaphor makes sense. Humana Inc.’s (NYSE: HUM) brought in more than $83 billion in 2021. CVS Health (NYSE: CVS), which owns the insurance company Aetna, earned more than $292 billion last year. UnitedHealth Group (NYSE: UNH) earned only slightly less at $287 billion.
“The idea that we can be a compelling nonprofit player that would do things differently together was really exciting to us,” Jain told Hospice News. “Now, those are nice things to say, but now we actually have to deliver on that and out-compete, deliver a higher value product. I think we’ve done that historically, and the point of this is to make it easier to do it even more.”
The combination is expected to close in 2023, subject to customary approvals.
Jain will become CEO of HealthRight, with CareOregon’s Hunter serving as president of the Medicaid division as well as CEO and president of the combined company’s CareOregon segment. Rosenstock will chair the board, which will include the members of SCAN’s current governing body as well as four from CareOregon. Among those will be CareOregon’s current chairman Damien Hall.
The two organizations’ consumer-facing brands will retain their current names under HealthRight.
The payer as provider
HealthRight’s emerging diversified business unit will feature several of the two companies’ current brands. These include a geriatric home-based primary care medical group called Welcome Health; Housecall Providers, an in-home primary and palliative care business; and the PACE program MyPlace Health, a joint venture between SCAN and Commonwealth Care Alliance (CCA).
Other components will include HomeBase Medical, a medical group focused on improving chronic disease management and palliative care for Medicare beneficiaries, and Healthcare in Action, a medical group for people experiencing homelessness. Also, post-closing, CareOregon plans create a new foundation to support improvements in the health of Oregon communities.
Possible expansion into hospice
As HealthRight comes together, the potential exists for the organization to expand the scope of its current portfolio. Down the road, this could mean hospice acquisitions, according to Jain.
“We’re interested in diversifying the ways in which we achieve our missions as organizations, and that would include potentially looking at other lines of business, including hospice over time,” Jain told Hospice News. “Obviously, our current focus is on making HealthRight come to life. But we think that this could be a destination over time for all kinds of health, nonprofit health care entities that want a different home.”
SCAN was poised to join the hospice component of the value-based insurance design model demonstration in 2023, and those plans remain unchanged. HealthRight will likely participate in future alternative payment model demonstrations as well.
“One of the main goals is for us to be great partners to state and federal governments, which means we want to be active participants in [requests for proposals from the U.S. Centers for Medicare & Medicaid Services (CMS)],” Jain said. “We want to be one of the participants in helping to shape the future of Medicare and Medicaid, and part of that is going to be through participation in these demonstration projects.”