Thursday, August 11, 2011

Major 501(c)(3) Health Care Provider to Buy 501(c)(4) Health Insurer

The Boston Globe reports that Partners HealthCare System Inc., a section 501(c)(3) tax-exempt nonprofit organization that is the parent organization for a group of section 501(c)(3) organizations operating Massachusetts General Hospital, Brigham and Women's Hospital, seven other other hospitals, a physician network, community health centers, and other health related programs, has signed a letter of intent to acquire Neighborhood Health Plan, a section 501(c)(4) tax-exempt nonprofit managed care organization that insures more than 240,000, mostly low-income, residents of Massachusetts. The article does not address whether the tax classification of Neighborhood Health would be affected by the deal.

According to the article, in exchange for the acquisition the 50,000+ employee Partners would provide grants to more than 50 community health centers affiliated with Neighborhood Health and also strive to improve the provision of health care to the urban poor in Boston and other (presumably Massachusetts) cities.  While this is apparently the first entry by Partners into the health insurance business, the article notes that other Massachusetts hospitals have or are likely in the near future to become affiliated with health insurance providers.  Because this deal would represent a significant consolidation of health care in Massachusetts, the article notes that concerns relating to competition may lead to close scutiny by state and federal officials who must approve the transaction.


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