With its acquisition of New York Medicare Advantage and Medicaid plan Fidelis Care now completed, major Medicaid insurer Centene Corp. is accelerating its MA growth strategy via a planned joint venture (JV) with not-for-profit health system Ascension.

Centene and Ascension on July 30 said they signed a letter of intent to establish an MA plan in multiple markets starting in 2020. The letter of intent is non-binding and a final agreement remains subject to due diligence and negotiation, noted the companies.

“There are no immediate financial implications, but over the long term a JV could aid [Centene’s] ambitions for Medicare Advantage to become a bigger growth driver, and provides another avenue for vertical integration and provider risk sharing that could potentially be extended to Medicaid and commercial products at some point if successful,” observed Evercore ISI securities analyst Michael Newshel in a research note.

Ascension is the largest Catholic health system in the U.S. with about 150 hospitals and more than 50 senior care facilities in 22 states.

Centene is now a leader in four of the biggest Medicaid managed care states, thanks to its recent purchase of Fidelis Care. The insurer projects the growing MA segment to drive more than 20% of its annual growth rate. As of June 30, it served nearly 344,000 Medicare members through products like MA and Special Needs Plans; Fidelis adds about 65,000 MA lives.

“While we view this potential JV as an interesting opportunity for [Centene], it would come with some level of shared economics, which may speak to the competitive MA backdrop and need for more partnership for a ‘new’ entrant such as Centene,” wrote Ralph Giacobbe with Citi Research.