BLUE CROSS CONVERSION
Blue Cross and Blue Shield of North Carolina said Tuesday it would withdraw its plan to convert to a for-profit company. The announcement came one day after its board of trustees voted unanimously to withdraw the plan, citing the lengthy and costly process.
"Our board has expressed its feelings on a number of occasions that there was not going to be an unlimited appetite for conversion," said Bob Greczyn, president and chief executive officer for Blue Cross. "It had to be the right business decision, and it's become clear that it's not the right business decision for us."
The company cited several factors, including that conversion could result in the company being subjected to regulatory restrictions that would make Blue Cross less competitive than it is now. In addition, Greczyn said, confidential business information could be made available to competitors.
The decision came less than a week after a consultant's report recommended that the state Insurance Department have the authority to oversee and possibly modify increases in cash compensation if Blue Cross converted from a nonprofit to a for-profit company.
It also came after insurance regulators tentatively determined whether they think Blue Cross should have been allowed to convert. That recommendation wasn't made public, however. The attorneys the DOI hired to work on the conversion could have taken two to three more months to draft a decision for Insurance Commissioner Jim Long, who would then determine whether the conversion was in the public interest.
Two earlier reports by consultant for the DOI raised doubts about statements by Blue Cross that its conversion would not result in higher insurance rates, that it would remain based in the state and that it needs to convert to compete with other insurers. Greczyn said the company did not foresee filing another conversion plan or pursuing any legislative avenues to convert to a for-profit company.
(Aaron Beard, THE ASSOCIATED PRESS, 7/8/03).
