By Aine Cryts

Grand Rapids-based Priority Health, the second-largest payer in Michigan, on Aug. 28 said it would acquire Total Health Care, a Detroit-based HMO. Industry insiders tell AIS Health that the deal could help the two smaller payers compete with dominant insurers like Blue Cross Blue Shield of Michigan.

Though the transaction is described as a merger by the two companies, Total Health Care will be a wholly owned subsidiary of Priority after the deal’s completion, spokesperson Jeremy Bakken says. The deal is expected to be completed in early 2020, pending approval by state regulators.

Experts say the payer market is in “consolidation mode” both in Michigan and nationally. In addition, as payers gain more experience with insurance products sold to individuals and through employers, they’re more likely to offer products to Medicaid and Medicare Advantage beneficiaries.

For example, Health Alliance Plan (HAP), a Detroit-based not-for-profit health plan subsidiary of Henry Ford Health System, in June acquired TRUSTED Health Plan, a 9,000-member Medicaid MCO based in Detroit. And Grand Blanc-based McLaren Health Care, a 13-hospital health system, acquired Indianapolis-based HMO MDWise in 2018.

Providers also are joining forces in the state, says Greg Gulick, an adjunct professor at Michigan State University’s Eli Broad College of Business. He says those deals are focused on gaining market share, growing the health systems and discovering new delivery models.

For example, Spectrum Health, a large health system serving 13 counties in West Michigan (and the majority owner of Priority Health), moved to acquire St. Joseph-based Lakeland Health, a three-hospital system, in 2018. And in July, Southfield, Mich.-based Beaumont Health, a nonprofit eight-hospital system, signed a letter of intent to acquire Summa Health, a hospital system with more than 30 locations in the Akron/Canton area.