“For nearly 50 years, Fallon Health has worked alongside the communities we serve to ensure access to the care and services they need and deserve, both now and in the future,” said Manny Lopes, president and CEO of Fallon Health, in a statement. “This move will allow us to double down on our mission of improving health and inspiring hope.”
According to data from the Center for Health Information and Analysis through mid-March, Fallon Health is among the smallest of the state’s insurers, with approximately 140,000 members. The insurer largely deals with government payers, such as Medicare and Medicaid.
MGB was selected after Fallon Health went searching for potential partners, amid an increasingly competitive insurance environment, when many insurers have reported financial losses.
In a joint news release, Fallon and MGB said Fallon Health conducted a “thoughtful and intentional process to identify a long-term partner aligned with its mission and strategic vision — one that ensures members continue to receive the care and support they need now and in the years ahead.”
“This intended approach underscores the mission-driven organizations’ shared commitments as not-for-profit health plans to broaden access and affordability, enhance care coordination, and strengthen our collective ability to serve communities across Massachusetts,” the release said, “with a particular focus on people covered by Medicare and Medicaid.”
There will be no immediate changes for members, the statement said.
The deal comes in the midst of a challenging time for insurers, and a difficult few years for Fallon.
The insurer reported a $22.5 million net margin in 2022; however, finances deteriorated to a $15.25 million net loss in 2023 and a $13.4 million net loss in 2024. Fallon additionally made layoffs in March, reducing its approximately 1,200-person workforce by less than 5 percent.
Despite those challenges, the insurer has not put off growth. In November, Fallon launched a new site in Dartmouth for PACE — a comprehensive program of health care and insurance for seniors who are jointly insured by Medicaid and Medicare, the seventh such location Fallon operates in the state.
Paul Hattis, a senior fellow at the Needham-based health care think tank the Lown Institute, applauded the fact that Fallon will have a protected future in the hands of a large, wealthy, and respected nonprofit system. The alternative could have resulted in Fallon ultimately struggling to exist independently or being acquired by a for-profit entity.
“In that sense, it’s positive,” Hattis said. “And I appreciate MGB seems to want to preserve what Fallon is about.”
The acquisition comes as MGB contemplates a number of other moves, including partnering with CVS to offer primary care, a new outpatient surgical center in Cambridge planned in partnership with Regent Surgical Health, and rebuilding a clinical tower on the Brigham and Women’s campus. In that context, Hattis said the moves could be an effort to garner good will with the Legislature and Governor Maura Healey as MGB plans other transactions.
Hattis additionally wondered whether bringing Worcester-based Fallon into the MGB umbrella would shift where patients get their care, particularly specialty care that seniors in Fallon’s different insurance products may need. Those referral changes could negatively impact other providers, such as Worcester-based UMass Memorial Health.
The acquisition may also be a sign that MGB is looking to bolster the scale of its insurance business overall, as a means to increase revenue in a time of constrained health care spending growth.
“It made me wonder [if] the first step you buy Fallon today, but in two to three years … MGB decides to buy (another insurer)?” Hattis said. “This could be a step in that direction.”
Jessica Bartlett can be reached at [email protected]. Follow her @ByJessBartlett.
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