business
Deal could energize Minneapolis start-up Bloom Health
- Article by: JACKIE CROSBY , Star Tribune
- Updated: September 20, 2011 - 9:04 PM
Bloom Health says the sale of a majority stake to major insurers will help it to create a national health insurance exchange.
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The Minneapolis start-up Bloom Health said Tuesday that it has a suite of new owners who give it the sweep it needs as it aims to create a national private health insurance exchange.
WellPoint Inc., the nation's largest insurer by enrollment, and two Blue Cross Blue Shield nonprofits paid an undisclosed sum for a majority stake in Bloom, which was founded in 2009 by entrepreneur Abir Sen.
"This is very exciting because it expands our approach in a bunch of different areas," said Sen, who will stay on as CEO. "Suddenly if I'm an employer with employees in all states, I have a very attractive option where I can go to a defined contribution approach and my employees have plans regardless of the state they live in."
Bloom Health bills itself as part insurance broker, part health finance adviser and part human resources department. Companies working with Bloom can set aside a certain amount for workers' health care. Employees use Bloom's Web-based questionnaire to choose a plan that best fits their family's health care needs.
Employers like it because it gives them a sense of how much their health care costs will be each year, and workers like it because they have a more direct say in how their health care dollars are spent, Sen said.
Under health care reform, states will be required to set up online exchanges by 2014 that will help people do a better job of comparing plans and prices, sort of like being able to shop online for airfares.
But recent surveys indicate that a growing number of companies are considering ending employer-sponsored insurance and paying a fine to send their workers to an exchange. Bloom may provide another route, Sen said.
"Some employers we've spoken to are not completely comfortable with state exchanges," he said. "They don't know about customer service, they don't know what variety of plans will be there. They'd prefer their employees stay in a private exchange that they can design or we can design for them, so they can limit their liability."
Bloom now works with about 50 employers in Minnesota, Michigan and Indiana but aims to be in all 50 states by 2012 now that it has access to a national network of Blue Cross Blue Shield affiliates.
Bloom partnered with Medica earlier this summer to set up its private exchange in Minnesota. That program is aimed at businesses with at least 51 employees and offers workers a choice of 20 Medica plans.
Under the deal announced Tuesday, original Bloom Health investor Blue Cross Blue Shield of Michigan increased its stake. The other Blue Cross Blue Shield nonprofit buying a stake is Health Care Services Corp., a holding company for plans in Illinois, New Mexico, Oklahoma and Texas.
WellPoint, based in Indianapolis, is an independent licensee of the Blue Cross and Blue Shield Association.
The three bought out two venture capital companies -- Chicago-based Sand Box Industries and Blue Cross Venture Partners, which invests in health start-ups.
The sale was an "interesting development," but not surprising, said David Martin, whose Edina company provides benefits counseling to employers.
"Bloom had to connect ultimately with somebody," he said. "It's a process, not a plan. They either had to become part of the government exchange or part of some kind of product line so they could use their system with some other type of product."
Jackie Crosby • 612-673-7335
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