Blue Cross and Blue Shield of Louisiana’s sale to a for-profit publicly traded conglomerate could lead to the establishment of a local nonprofit foundation worth billions.
What that will look like in practice, assuming Elevance Health’s acquisition closes as expected later this year, remains to be seen. But for scale, bear in mind that the Baton Rouge Area Foundation reported $722 million in assets in 2020.
The foundation, called the Accelerate Louisiana Initiative, would “address the unique and complex needs of the people of Louisiana with the mission to improve the health and lives of the people of Louisiana by addressing health inequities and strengthening local communities,” according to a joint announcement from the two companies.
“Details of the foundation won’t be finalized and announced until after the transaction closes,” Cindy Wakefield with BCBSLA says in response to a request for more information. “We’re not disclosing the terms of the agreement.”
Blue Cross is a nonprofit, private mutual company owned by its policyholders, so when it sells, there are no owners in the traditional sense to pay. Typically, proceeds would be allocated to a nonprofit fund or charity, so the nonprofit’s community mission ostensibly can continue in some form.
“They’ve got to find a way of institutionalizing that,” says Walter Lane, a health care economist and associate professor at the University of New Orleans. “That is standard for a not-for-profit.”
A similar process played out when nonprofit Methodist Hospital in New Orleans East sold to a for-profit system after Hurricane Katrina, and the president of the local hospital became the president of the new foundation, he says.
“For the last 10 years, they’ve been sitting there trying to give away that money,” Lane says.
The only other option Lane is aware of is giving the money to policyholders, though the companies’ statement does not suggest that option is being considered.