Early this month, Oregon-based health insurance provider PacificSource Health Plans signed a letter of intent to purchase a sizable chunk of Montana's second largest health insurer, New West Health Services. New West announced earlier this year that it would be exiting the commercial insurance market, and originally intended to sell to Blue Cross and Blue Shield of Montana. Antitrust officials intervened, stating that such a transfer would give Blue Cross too dominant a share in Montana's market.
Enter PacificSource, a not-for-profit founded in 1933 by 21 physicians at Pacific Christian Hospital in Eugene. The company began an ambitious growth strategy several years back, buying up providers like Bend, Ore.-based competitor Clear One Health Plans and expanding into markets in central Oregon, Washington and Idaho. PacificSource is already a familiar name to 1,500 Montana members who enrolled with the company after the $46 million Clear One purchase in 2010.
For the rest, however, PacificSource is a stranger. President and CEO Ken Provencher says the biggest challenge PacificSource now faces is building a brand and establishing a community presence in Montana, as it did in Idaho. When PacificSource bought Boise-based Primary Health in 2009, Primary had 15,000 members. PacificSource has increased Idaho enrollment to 35,000 members.
"The communities...in Montana are very similar to communities where we've had success in the past, and where we think our model works really well," Provencher says.
Provencher took the helm at PacificSource in 2001, after his predecessor and the company's chief financial officer resigned over financial irregularities discovered during a state insurance investigation. He's since focused on expanding not only PacificSource's geographic footprint but also its market presence. The acquisition of Clear One marked the company's first involvement in Medicare and Medicaid. Provencher has also directed PacificSource to continue emphasizing healthy living in its members' communities; last fall, PacificSource gave the University of Oregon a $1 million grant to help students and faculty quit tobacco.
"We've really put an emphasis on being an effective community partner and an investor in improving health," Provencher says.
PacificSource is set to inherit up to 10,000 customers from New West, adding to its 261,000-member network across the Pacific Northwest. Provencher says he doesn't anticipate any major changes for former New West members.