Sunday, July 3, 2011

DeParle's CareMore Sold to WellPoint for $800 Million

Dealbook reported:

WellPoint, one of the nation’s largest health insurers, has agreed to buy CareMore for about $800 million, according to people briefed on the transaction.  The deal, which was announced on Wednesday morning, would add to WellPoint’s already dominant position in California, Arizona and Nevada, where the privately held CareMore provides managed care to about 54,000 elderly people.

“The Medicare market is particularly significant for WellPoint’s growth strategy,” Angela F. Braly, chairwoman and chief executive of WellPoint, said in a statement. “We anticipate that more than one million Baby Boomers will age into Medicare every year between now and 2030 across our 14 Blue states.”
CareMore is owned by CCMP Capital Parnters, formerly known as JP Morgan Partners.  CCMP is a private equity underwriter (PEU).  Businesswire reported on the original deal in January 2006:

JPMP teamed with Crystal Cove Partners to find a Medicare health plan designed to succeed with the environment created by the passage of the Medicare Modernization Act (MMA). JPMP also works closely with its consulting partner, Nancy-Ann DeParle. Ms. DeParle was the former head of HCFA (now known as Centers for Medicare and Medicaid Services) and is currently a Commissioner of the Medicare Payment Advisory Commission (MedPAC), which advises Congress on Medicare policy and payment issues.
Ms. DeParle was in an ideal spot to pick winners for JP Morgan Partners/CCMP.
That spot got sweeter with her White House Health Czar appointment, where she crafted the nuts and bolts of health reform.  How did her redesign profit her former employer?  Dealbook provided insight.

CCMP, formerly JPMorgan Partners, acquired CareMore in 2006. The PEU is expected to earn about five times its original investment in the company, people familiar with the deal’s terms said.
A five bagger!  That's one bag per year of ownership.  Nancy did good for the for-profiteers, as CCMP cited the "very successful outcome of this investment."

How will selling CareMore to WellPoint for five times its original investment impact exploding health care costs?  Especially deals the increase a for-profit insurers already dominant position.  Please answer the question, Ms. DeParle.

Update 8-17-11:  I submitted the following to DealBook: White Health Health Czar Nancy Ann DeParle sat on the CareMore board for nearly three years. That usually comes with an equity stake of some sort. DeParle is now Deputy Chief of Staff for President Obama and despite disposing of all conflicting investments, in 2010 DeParle received a capital gain from a medical imaging company CCMP sold in 2007. She transferred her stakes in CCP/JPMP Friends to her son, a move similar to Rick Scott's giving his Solantic shares to his wife. Red and Blue love PEU's (private equity underwriters).