Startup Buys Citizens Choice Health
A well-funded Orange County startup has acquired a Medicare Advantage health plan to gain a toehold into the Southern California market.
Irvine-based Alignment Healthcare purchased Cerritos-based Citizens Choice Health Plan for an undisclosed sum. Citizens Choice, which also goes by the name Honored Citizens Choice, had about 13,000 Medicare Advantage enrollees in Los Angeles and Orange Counties and was headquartered in Cerritos. However, it had been in recent financial and operational difficulties, with enrollment dipping by about 15% over the past year and revenues declining about 20%. Alignment officials suggested that the health plan may have not had the capital to make a big enrollment push, and that it would use its money and expertise and in coordinating care for Medicare populations in order to cut costs and eventually attract greater enrollment. In particular, it would focus on cutting hospital readmissions and improving the health of enrollees with chronic illnesses.
“This was a strategic acquisition for Alignment based on our goal to be the leading population health management company in the country,” said John Kao, Alignment's chief executive officer and founder. Kao was formerly president of Caremore Medical Enterprises, which was acquired last year by WellPoint, Inc. Several other top managers at Alignment also held top positions at Caremore, which also focused on delivering coordinated care to seniors.
Alignment spokesperson Dawn Maroney said that most of Citizens Choice's 125 employees kept their positions, and that new hires are taking place. Chuck Weber, Alignment's chief operating officer and a former Caremore vice president, was named CEO of Citizens Choice. The plan also recently moved its headquarters from Cerritos to Orange, Maroney said.
Last month, Alignment secured a contract with UNC Health Care in North Carolina to launch a new Medicare Advantage health plan based on the tenets of improving the quality of care while reducing costs.
In April, Alignment received a $125 million funding commitment from New York-based private equity firm General Atlantic. That company's portfolio includes Squarespace, Zagat, Fandango and Facebook.
