Anne Arundel Health System, LifeBridge Health among Evergreen Health's buyers

LifeBridge Health, Anne Arundel Health System and a group of private investors are moving forward with plans to acquire Baltimore health insurer Evergreen Health.

In a bid to stay in business, the nonprofit health insurance firm announced plans in October to be acquired and convert to a for-profit insurance company. Until today, Evergreen's buyers remained anonymous. Financial terms have not been disclosed.


The deal, subject to approval from the Maryland Insurance Administration, adds to a growing list of health care providers getting into the insurance business as a way to improve quality while reducing costs.

"Part of it is theoretical — if they control, in essence, from the beginning to the end, their providers will be aligned to offer the best care at the lowest cost and return lower premiums as a result to the people on their plan," said Josh Archambault, a senior fellow with Foundation for Government Accountability.


The number of provider-sponsored health plans, or insurance plans offered by health systems and physician groups more than doubled from 107 in 2014 to 270 in 2016, according to a May 2016 report by Pricewaterhouse Coopers Health Research Institute.

The national trend toward quality and value in health care is more tangible in Maryland, where a federal pilot program ties what hospitals are paid to their ability to keep patients well. The system has pushed health systems to go beyond their hospital walls, partnering with other medical providers, such as nursing homes and primary care clinics.

In addition to owning four hospitals, LifeBridge Health has over the past four years built up a network of hospice, long-term care, ambulatory care and wellness centers to treat patients, "from wellness on the far left side to hospice on the far right," said CEO Neil Meltzer.

"We see ourselves as an integrated delivery system, as opposed to just a hospital system," Meltzer said.

Insurance is a piece of the puzzle that has been missing for LifeBridge and Anne Arundel Health System, which also includes a substance abuse treatment center and outpatient offices across the region.

"This is an investment opportunity to continue to expand access," said Maulik Joshi, the chief operating officer at Anne Arundel Health System. "Access is key and affordable health insurance is one way to get access."

Joshi said adding an insurance offering has been part of the health system's strategic plan as a way to expand its reach and diversify its revenue stream.

The health systems could work with Evergreen to design benefit plans that give members incentives to better manage their chronic conditions or seek out primary and preventive care — which could in turn help the health systems meet their goals of reducing hospital costs, Meltzer said.


Evergreen was one of 23 consumer-oriented and -operated health insurance plans created under and funded by the federal Affordable Care Act. Almost all have gone out of business, unable to withstand the high cost of building an insurance company from scratch.

In January, Evergreen and its investors reached a deal with the Centers for Medicare and Medicaid Services, which oversees the co-op program, to repay $3.2 million of a $65 million federal startup loan it received. In exchange, Evergreen was released from the co-op program — a key step in converting to a for-profit insurer.

"Evergreen now has the finances and partners to compete in the Maryland insurance market," said Dr. Scott Rifkin, a principal of JARS Health Investments, the private investor group formed for the purpose of acquiring Evergreen. "The combined strength of the investors will make Evergreen a new powerhouse that brings competition to the marketplace."

Rifkin is also co-founder and CEO of Mid-Atlantic Health Care, which owns a network of skilled nursing centers in Pennsylvania.

Beyond giving Evergreen an influx of much-needed capital, the deal opens up possibilities for boosting enrollment and expanding the insurer's network of doctors and services, said Evergreen CEO Dr. Peter Beilenson.

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"Because of the cloud hanging over us, until we were able to announce this deal and who the major partners are — and how major the partners are — there wasn't the confidence in us among brokers," Beilenson said. "We think this will be a sure shot to the arm for enrollment."


Evergreen currently has about 26,000 members, all covered by plans for small or large businesses.

Beilenson's background in public health in Maryland makes Evergreen a natural partner for LifeBridge and Anne Arundel Health System, said Jack Meyer, a senior fellow at Health Management Associates, who previously served on the state board that regulates hospital pay

Prior to founding Evergreen Health, Beilenson worked as the Baltimore City health commissioner and served as the top health official in Howard County, where he played a leading role in establishing the county's community health organization, Healthy Howard.

"He understands the commitment to cover the uninsured, to serve the uninsured and that many of them have many serious mental, emotional and social barriers to health," Meyer said. "I think an organization like his that understands Maryland health reform in the broader sense, if it had the proper infusion of capital, would be poised to make a contribution."