Catholic Health to shed insurer

QualChoice loss of $97M noted

Catholic Health Initiatives, which owns the CHI St. Vincent system, plans to sell its health insurance subsidiary, QualChoice Health Inc.

QualChoice covers about 53,000 Arkansans, and, according to Catholic Health Initiatives' quarterly report, the insurer lost $97 million in the nine months ending March 31.

Catholic Health, according to the documents released this week, "approved a shift in strategy surrounding QualChoice Health, Inc., and decided to exit the health insurance business."

Catholic Health Initiatives reported $222.2 million in assets for QualChoice as of March 31 with $377 million in insurance premium revenue. Catholic Health acquired QualChoice for an undisclosed price in May 2014.

A Catholic Health spokesman confirmed the company "continues to explore all strategic options including partnership as well as the sale of all or part of the health insurance business."

QualChoice reported a $19 million loss in the same nine-month period of 2015. Premium revenue is up from $268 million last year.

Medical claim losses of $137.5 million were a challenge for Catholic Health, according to the quarterly report.

"Medical claims expenses increased 70.4 percent," the document says.

A message sent to a representative for QualChoice, a participant in the statewide insurance exchange, was not immediately returned. Approval for the sale would be required by the Arkansas insurance commissioner.

Arkansas Insurance Department spokesman Ryan James said it could take more than a year from the time a buyer is found for the transaction to be completed.

"What we saw today is Catholic Health Initiatives hanging out the For Sale sign," James said. "We're not aware that there is a buyer lurking in the wings. I think they just put out the word they are looking to sell. From the time a buyer is found, there is a lot of due diligence to be conducted on whomever the buyer is going to be. Short term that does not mean anything for QualChoice Health customers for the rest of this plan year and the next plan year."

Catholic Health listed assets of $23.6 billion for the fiscal year that ended June 30, 2015. It operates 102 hospitals in 18 states.

Recently the hospital system announced it sold $724.9 million worth of real estate in 10 states to Physicians Realty Trust, a publicly traded real estate trust based in Milwaukee. Included in that transaction were portions of buildings formerly owned by CHI St. Vincent Infirmary in Little Rock that were sold for about $7.6 million.

Business on 07/01/2016

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