Blue Cross Wellpoint and Health Systems International merger -- Statement by Harry Snyder: how consumers will be affected.SAN FRANCISCO--(BUSINESS WIRE)--March 28, 1995--The following is a statement by Harry Snyder
Harry Snyder , co-director, Consumers Union, West Coast Regional Office, regarding the Blue Cross/Wellpoint and Health Systems International merger, and how consumers will be affected: -0- "The control of billions of dollars in funding for health care charities hangs in the balance as decisions are made concerning Blue Cross/Wellpoint's bid to merge with Health Systems International (HSI (Hue Saturation Intensity) A color space similar to HSB. See HSB. ) and Blue Shield's attempts to buy out Blue Cross/Wellpoint. It appears that the merger may be an attempt to deflect de·flect intr. & tr.v. de·flect·ed, de·flect·ing, de·flects To turn aside or cause to turn aside; bend or deviate. [Latin d a take over by Blue Shield Blue Shield A US not-for-profit health care insurer that is a reimbursement intermediary for physicians. Cf Blue Cross. , which could be more valuable to a new foundation to be created by a Blue Cross/Wellpoint conversion. Before he approves a merger agreement between Blue Cross/Wellpoint and any entity, we urge the Department of Corporations Commissioner Gary Mendoza to immediately appoint an independent Board of Directors and counsel for the new foundation to be created by Blue Cross/Wellpoint. "Since 1993, nonprofit A corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive. Nonprofits are also called not-for-profit corporations. Nonprofit corporations are created according to state law. Blue Cross has skirted the law that requires it to turn over the value of its assets to charity when it created Wellpoint, California's largest for-profit HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, . Last September, under pressure from state regulators and consumer groups, Blue Cross announced its plan to dissolve its nonprofit business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets and turn over its assets, 80% in Wellpoint stock, to a new foundation. Now Wellpoint appears to be rushing a gigantic merger before an independent Board of the new foundation can be appointed. "Consumers Union urges the Commissioner to eliminate the conflicts of interest between Blue Cross/Wellpoint and the new foundation, before approving any deal regarding the company. The decisions regarding a merger or buyout will have a critical impact on the future of the new foundation, its funding and its ability to freely and fully carry out its philanthropic activities. "Consumers Union has long argued that the Board of the new foundation should be completely independent from Blue Cross and Wellpoint. The independence of the Board of the new foundation is essential to protect it and its philanthropic activities from conflicts of interest. It is easy to foresee instances where the interests of the foundation will be different or adverse to the interests of the for-profit corporation A for-profit corporation is a corporation that is intended to operate a business which will return a profit to the owners. A for-profit corporation, depending on the jurisdiction to which it is incorporated, may be operated either as a stock corporation or as a non-stock in which the foundation holds stock. These problems have been clearly demonstrated by the recent litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. filed by the Wellness Foundation against HSI. The current possible transactions may present another example. "We are concerned that the Blue Cross and Wellpoint Boards will not consider these transactions in light of their potential benefit to the new foundation. Their fiduciary duties Noun 1. fiduciary duty - the legal duty of a fiduciary to act in the best interests of the beneficiary legal duty - acts which the law requires be done or forborne as Board members require them to make decisions in a manner that is most beneficial to their respective corporations, and not to the new foundation. As a result, it is up to an independent Board and counsel and the Department of Corporations to vigilantly protect these assets for California's health care consumers. "In addition, Consumers Union believes these transactions may lead to a serious decrease in competition in the marketplace, possibly restricting consumer choice and access to health care. It is essential that the Department of Corporations carefully spell out how consumers will be protected and guaranteed quality of care and complete coverage if the massive mergers are approved." CONTACT: Consumers Union Elle Hamburger, 415/431-6747 |
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