The SCAN Group and CareOregon announced late Wednesday that they have entered an agreement to combine under the name HealthRight Group.
It’s a deal that is, at least to some extent, more than two years in the making. On Sachin Jain’s first day in his new role as president and CEO at the SCAN Group, he was introduced to someone who suggested getting to know the CareOregon team.
They were first described to Jain as “a lot like SCAN, but in Medicaid.” Conversations with leaders at CareOregon progressed over the months and years – conversations that felt like “talking cousins,” Jain told Home Health Care News. Eventually, the SCAN Group wrote a letter to CareOregon saying that it would like to combine.
Now the two will through the combination of SCAN’s Medicare portfolio and CareOregon’s predominantly Medicaid health plans.
Together, they will become a “mission-driven, nonprofit health care organization,” according to the company’s release. Specifically, they want to improve access to traditionally undeserved populations.
On the way, however, Jain also said he believes these companies can start acting more like for-profit entities – at least in some ways.
“I think the bigger story here is that nonprofits can do what private equity entities are doing too, with consolidation and the amassing of assets.” Jain said. “That isn’t just a private sector story. And maybe nonprofits need to start thinking more like for-profits in this regard.”
After the deal is closed, HealthRight will also launch a diversified business unit that will be comprised of the assets from both organizations. That will be very focused on home-based care delivery, according to Jain.
Among the Long Beach, California-based SCAN Group’s existing assets are an array of home-focused programs. Those include:
– Healthcare in Action, a medical group for people experiencing homelessness
– Welcome Health, a primary care unit that provides virtual and in-home visits
– HomeBase Medical, a medical group focused on improving chronic disease management
– myPlace Health, a Program of All-Inclusive Care for the Elderly (PACE) entity
– SCAN Health Plan, a Medicare Advantage (MA) plan with over 270,000 members across California, Nevada and Arizona, as well as Texas beginning in 2023
– Independence at Home, a SCAN Health Plan community service that provides services and support to seniors and their caregivers.
On the Portland, Oregon-based CareOregon’s end, it is a nonprofit health plan that helps more than 500,000 Oregonians access physical, mental and prescription health care coverage. It also has Housecall Providers, an in-home primary and palliative care business.
Geographically, the two companies’ connection creates a natural, northward expansion to SCAN’s existing footprint.
“A lot of the pieces just started to fall into place,” Jain explained. “The legacy SCAN would become the Medicare division of the company. CareOregon has been phenomenal at Medicaid. As one of the most renowned not-for-profit Medicaid organizations, they are going to lead the Medicaid division. And [both organizations] had a number of assets that would come together in a diversified business unit and sell services back to the plans, as well as to other like-minded plans and medical groups across the country. That’s the vision that we came up with together.”
Jain will become the CEO of HealthRight. Eric C. Hunter will serve as president of HealthRight’s Medicaid Division, and will also continue in his current role as CEO and president of CareOregon.
SCAN Health Plan’s board chair Dr. Linda Rosenstock will serve in the same position for HealthRight Group. Four members of the CareOregon board will also be a part of the new company’s board, including its chair, Damien Hall, while other SCAN board members will continue in their roles.
“What makes this process so unique is that it is additive,” Hunter said in a press release. “We are coming together as community-based healthcare organizations that are driven by local community needs, and we’re building on that.”
The two organizations’ consumer-facing brands will remain unchanged. CareOregon will also maintain its separate board, community advisory councils and staffing.
The deal is expected to close in 2023. When it does, the combined resources of CareOregon and SCAN Group are expected to have revenues of $6.8 billion and over 800,000 health plan members.
One advantage to having this sort of combination come together in the nonprofit world is that, post-closing, HealthRight Group will have time to figure things out.
They won’t need to unnecessarily cut things, for example, or even hit some sort of earnings mark in a given time period, Jain said.
“I’m not somebody who believes that nonprofit is intuitively good and for-profit is bad,” he said. “You have plenty of nonprofit organizations that act like for-profits and [vice-versa], but what I can say about these two organizations together is that their cultures are special. We, on the margins, will always make the decision that’s going to be right for the member, and that’s going to be right for the community.”
Even so, Jain has ambitions for the company to scale, just as a for-profit provider or plan may after a significant acquisition, combination or merger. The company wants to continue creating and offering services people want to use. It wants to grow.
After all, if the combined entity’s leaders believe in their home- and community-focused efforts to help care for the needy, expanding services to more people only makes sense.
“The idea that we can be a compelling nonprofit player that would do things differently together was really exciting to us,” Jain said. “Now, those are nice things to say, but now we actually have to deliver on that and out-compete, deliver a higher value product. I think we’ve done that historically, and the point of this is to make it easier to do it even more.”
Hospice News Editor Jim Parker contributed to this report