Dive Brief:
Blue Shield of California, one of the largest plans in the state, has revamped its corporate structure and named its first-ever female CEO.
Blue Shield created a parent company called Ascendiun to oversee the insurer, along with its managed Medicaid subsidiary and clinical services firm Altais, starting Jan. 1, the company announced Wednesday. Ascendiun also includes a newly created health services business called Stellarus, which aims to scale and sell Blue Shield’s pharmacy and technology offerings to other insurers.
Lois Quam, who has been Blue Shield’s president since last year, will step up as chief executive of the insurer. Quam will be the first woman to serve as Blue Shield’s CEO in the organization’s 86 years of operation. Paul Markovich, Blue Shield’s CEO for over a decade, will become president of Ascendiun and will also lead Stellarus on an interim basis.
Dive Insight:
The goal of the restructuring is to cut back on bureaucracy to better serve Blue Shield’s members, said Kristina Leslie, the chair of the company’s board, in a statement.
However, the launch of a health services business also suggests the Oakland-based insurer sees financial opportunity in peddling products to other plans — especially amid widespread discontent with pharmacy benefit managers, middlemen in the pharmaceutical supply chain that oversee payers’ drug benefits. PBMs are frequently blamed for rising drug costs in the U.S., along with complex black box contracts that health insurers and employers say leave them in the dark.
Blue Shield has been more aggressive than most in working to curb drug costs, including through an unusual pharmacy benefits arrangement.
In 2023, the payer announced it would drop CVS Caremark, one of the largest PBMs in the country, as its pharmacy manager. Instead, Blue Shield elected to break up pharmacy services between five companies, including Amazon Pharmacy and Mark Cuban Cost Plus Drug Company.
The arrangement, which became available to clients for 2025, will save $500 million annually, according to the company.
Blue Shield is also willing to strike deals directly with drugmakers for cheaper versions of pricey brand-name medications. In October, the insurer negotiated with a subsidiary of German manufacturer Fresenius for a biosimilar of Humira, AbbVie’s blockbuster drug that treats a variety of inflammatory conditions.
A spokesperson for Blue Shield did not provide specifics on what Stellarus might sell, saying instead the division is initially focused on bolstering the insurers’ programs internally.
Stellarus has no definitive timeline for offering products to other plans, the spokesperson said.
Blue Cross and Blue Shield plans have shown themselves increasingly willing to restructure to keep up with well-capitalized, for-profit peers. In 2023, Blue Cross and Blue Shield of North Carolina received approval from the state legislature to transfer assets into a parent company run by the same executive leadership, despite concerns the arrangement could allow the nonprofit to move money around without proper oversight.
Blue Shield’s spokesperson declined to share financial information about Ascendiun. Blue Shield itself, which covers nearly six million members, brings in more than $25 million in annual revenue.
Lois Quam, Blue Shield’s first female CEO.
Permission granted by Blue Shield of California
Quam is taking the reins of the massive California plan at a time of widespread resentment against health insurers, stoked by the killing of UnitedHealthcare CEO Brian Thompson in December.
The executive is a veteran of both the public and private healthcare industries, serving as president and CEO of UnitedHealth’s public and senior markets division from 1990 to 2007, according to her LinkedIn. After, Quam lead global health initiatives in the State Department during the Obama administration before stints at environmental organization The Nature Conservancy and Pathfinder, a global women’s health nonprofit.
On Wednesday Blue Shield also named Susan Mullaney, the former executive vice president of strategic initiatives, as COO.
