Minnetonka-based Medica said this week it is investing in Wisconsin-based Dean Health Plan, a deal that continues the health insurer’s recent growth spurt into markets beyond Minnesota.
Financial terms of the agreement with Dean Health, which operates out of the Madison region, were not disclosed.
In a deal characterized as a “strategic relationship,” both companies will continue selling health insurance products under their own brands.
“We are both keeping a significant ownership percentage in this collaboration,” John Naylor, the chief executive at Medica, said in an interview.
Dean Health Plan is a subsidiary of SSM Health, a St. Louis-based health system with hospitals and clinics in Illinois, Missouri, Oklahoma and Wisconsin. Through the investment in Dean Health Plan, Medica would help SSM Health sell health plans across all the regional markets where the nonprofit group operates.
Since 2017, Medica has grown its own operations beyond the Upper Midwest to a total of nine states, including several states that overlap with SSM Health..
The deal continues Medica’s recent pattern of partnering with local health systems as the health plan grows.
Dean Health is about half the size of Medica, which has roughly 1 million health plan members, Naylor said. No jobs are coming to the Twin Cities in the near term, he said.
Over the last four years, Medica’s employee base has grown by about 30%, Naylor said, and now has about 2,000 employees.
With the new investment “there is an opportunity to leverage Medica’s investments in technology, platforms and operations to improve the performance of Dean Health Plan,” Naylor said. “That also for us brings an opportunity to get more scale — they have about a half a million members.”
The agreement, which must be approved by regulators, is expected to be finalized during the fourth quarter.