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November 19, 2015 12:06 PM

Avera, DAKOTACARE Agree To Merger

Sioux Falls, SD

In an industry not known for make snap decisions, today's announcement was surprising. In fact, it took less than two weeks for DAKOTACARE and Avera Health to agree on a purchase plan.

"I've been in the business for over 30 years. I can assure you that that's unusual," Senior Vice President of Avera Health, Rob Bates, said.

Officials say the talks started this month because DAKOTACARE was struggling with changes under the Affordable Care Act. Dakotacare pulled out of the federal government's health insurance Marketplace last month, saying it couldn't afford to offer individual policies under Obamacare.

"There are a lot of companies that have struggled to be on the exchange. There are a lot of taxes and fees associated with healthcare reform. For smaller companies it's been difficult," DAKOTACARE Board Chair, Dr. Kevin Bjordahl, said.

Despite the merger, officials emphasize the thousands of Avera Health Plan and Dakotacare members won't notice a difference once the ownership officially changes hands. For now, Avera will operate the two organizations separately.

"We hope the products they have come to know and trust from Avera Health Plans will still look the same and the products from DAKOTACARE will still look the same in the short-term," Bates said.

The same may not be true for Avera Health Plan and DAKOTACARE employees. Bates says there's no plan to cut staff right now, but it's not out of the question.

"Certainly with two separate insurance companies, we're going to look at efficiencies between the two. As I've already told the management team, we probably don't need two of everything we have. I'm not thinking so much of people but of systems and infrastructure," Bates said.

Still, Bates emphasizes the move is a win for the people of South Dakota.

"Being stronger together, we may have some different offerings than we do separately. That's innovation we'll look at going forward," Bates said.

"I think bringing the two organizations together brings some strengths. We can join together and have some synergy," Bjordahl said.

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