One of the nation's biggest health insurers, Wellpoint Inc., is buying the administrator of Delta Dental plans for an undisclosed sum.
Indianapolis-based Wellpoint is buying Eagan-based DeCare Dental, which has annual revenue of $1 billion and 4 million dental plan members nationally. Wellpoint is the nation's largest health insurer by membership and already has 5 million dental plan members (Minnetonka-based UnitedHealth Group has higher revenue.)
The deal announced Tuesday is not expected to bring immediate changes for Delta Dental members. Wellpoint and DeCare hope the deal will help them cross-sell medical and dental insurance, perhaps combining them in the future, even as new links emerge between oral and overall health.
Like the rest of the medical insurance industry, Wellpoint is struggling to grow at a time when employers are paring benefits. The purchase is a chance to expand its specialty business, which includes life and disability insurance in addition to dental insurance.
Wellpoint is going after "the talent, the management team and the technology [DeCare has] developed," said Dennis Casey, president and chief executive of WellPoint's UniCare and Specialty business.
DeCare's headquarters will remain in Eagan and its management team will remain intact. The company has 800 employees, 500 of them in Minnesota.
About half its members are in Minnesota. DeCare contracts with Blue Cross & Blue Shield of Minnesota, Medica and others. It administers 10 dental plans, including Delta Dental.
Dental insurance is a low-margin business that relies on a high volume of clients, said Mike Walsh, president and chief executive of DeCare.
While medical and dental insurance traditionally have been sold separately, researchers are finding new links between oral health and medical conditions such as cardiovascular disease and diabetes.
With Tuesday's deal, Wellpoint and DeCare hope to be able combine their members' medical and dental data to get a better picture of overall health.
Wellpoint is developing new products that combine medical and dental insurance. So far, a handful of clients have looked at one such product and one has purchased it, Casey said.
Chen May Yee • 612-673-7434
