SCAN, CareOregon call off merger

CareOregon and SCAN Group have called off a proposed merger between the two nonprofit insurers, after state regulators expressed skepticism about the deal. 

In a joint statement shared with Becker's Feb. 14, the two insurers said they mutually agreed to withdraw their application to affiliate from Oregon regulatory agencies. 

"SCAN and CareOregon share a commitment to preserving and protecting nonprofit, locally based healthcare and that has always been our goal in combining under the HealthRight Group. Our intent in coming together was to support Oregon's healthcare system and the people that CareOregon serves," the statement read. "However, despite our efforts, there are still questions about our combination." 

The two insurers first announced plans to merge under the name HealthRight Group in December 2022, with expectations the deal would close by the end of 2023. Portland-based CareOregon has more than 500,000 Medicaid managed care members, while Long Beach, Calif.-based SCAN Group has more than 285,000 Medicare Advantage members. The merger would have created an organization with $6.8 billion in revenue and nearly 800,000 members. 

Oregon regulators expressed concerns with the deal. In December, the state's Medicaid Advisory Committee recommended the state not approve the merger, "in the absence of sufficient responses" to further questions from the committee. One critic, former Oregon Gov. John Kitzhaber, MD, said the deal would shift public Medicaid dollars out of Oregon to the California-based SCAN Group. 

In January, the two insurers requested public hearings on the deal be pushed back until March to give the entities more time to address concerns from the public, according to records obtained by the Lund Report.

CareOregon CEO Eric Hunter previously told Becker's the state's regulatory process was frustrating and one-sided.

Mr. Hunter and SCAN Group CEO Sachin Jain, MD, told Becker's in December the proposed merger is intended to give the nonprofit insurers more ability to compete with larger, for-profit companies. 

"One day we're going to wake up, and everything is going to be run by three big for-profit companies in this country. That's where we're trending," Dr. Jain said. "Folks who are questioning this transaction aren't reading the national tea leaves on that." 

On the same day SCAN Group and CareOregon said their merger was off, Blue Cross and Blue Shield of Louisiana also withdrew its application to be acquired by Elevance Health. The deal also faced scrutiny from regulators, physicians and policyholders.

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