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Evolent Health acquires New Mexico Health Connections commercial business to build new health plan

The companies will also build a new managed services organization called True Health New Mexico.

Jeff Lagasse, Associate Editor

Evolent headquarters in Arlington, Virginia (Google Earth)

Evolent Health has officially acquired New Mexico Health Connections in a move initially announced in September. With the acquisition in the books, the companies will operate a new health plan and managed services organization called True Health New Mexico.

Managed service organizations have become increasingly common. They're designed to help with the administrative, non-medical work involved in running a practice, such as financial management and coding and billing services. These organizations typically aggregate volume; as such, they obtain economies of scale that allows them to obtain preferred pricing on everything from medical supplies to healthcare insurance.

[Also: Advisory Board exploring merger with Evolent Health weeks after fending off takeover]

True Health New Mexico is a wholly-owned subsidiary of Evolent Health, a company which provides an integrated value-based care platform to health systems and physician organizations.

New Mexico Health Connections will continue to operate as an independent nonprofit healthcare organization operating throughout the state of New Mexico, offering individual health insurance products. As of December 31, 2017, membership in the commercial plan was just under 20,000 members.

[Also: Evolent acquires majority ownership of Valence Health for $145 million]

True Health New Mexico expects to enter into a managed services agreement with NMHC to support this ongoing individual business. The acquisition closed on the terms previously announced, with Evolent acquiring assets related to the commercial business from New Mexico Health Connections for $10.25 million in cash.

Those assets include a commercial plan and health plan management services organization. NMHC works locally with providers to run preventive, disease and care management programs.

To bring stability to its provider partners, who will be serving commercial members as well as NMHC's individual members, Evolent expects to extend a 15-month capital-only reinsurance arrangement to NMHC, which is projected to be about $10 million.

True Health New Mexico, expects to underwrite the contract. The purpose of the capital-only reinsurance is to provide balance sheet support to NMHC.

Twitter: @JELagasse
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