Blue Cross and Blue Shield of Colorado has asked its state insurance regulators for permission to become a for-profit, stockholder-owned corporation.
The nonprofit Denver company told regulators it would comply with state laws enacted last year in an effort to keep nonprofit assets in nonprofit hands.
Colorado Blue will give all of its newly issued stock to two independent charities, Caring for Kids Foundation and Caring for Colorado Foundation, and let them handle the sale of the shares, the company said in a conversion plan filed Jan. 14.
The company also agreed to abide by a state law that prohibits current or former officers, directors or staff members of Colorado Blue from serving as officers, directors or staff members of the foundations.
After the conversion, Colorado Blue would operate under the control of a new holding company, Rocky Mountain Health Care Corp. It would use its new ability to issue stock to raise the capital it needs to upgrade its computer systems. the company said.
The Colorado Division of Insurance has just begun to analyze the conversion application and is not yet prepared to discuss its provisions, said Maryellen Waggoner, division deputy director.
The division staff expects to review the application for completeness by Jan. 24 and once it decides the application is complete. it will publish hearing notices for 30 days. The division will schedule hearings within 60 days after the publication of the notices.
The division is still deciding how it will handle the review of the content of the application. 'This is a process that's new to us,' Ms. Waggoner said.
The division has hired Bear, Stearns & Co., New York, to appraise Colorado Blue; Dr. Nancy Kane of Harvard University to evaluate the company's charitable trust obligations; and Patrick Cantilo, an Austin, Texas, lawyer, to provide legal advice.
Colorado Blue serves 340,000 health plan members in its home state and had $325 million in 1996 revenue.
The company recently acquired Blue Cross and Blue Shield of Nevada, Reno, Nev., through a merger. Nevada Blue had 44,400 members and $50 million in annual revenue. It contributed $1.5 million, or $34 per member, to charity around the time it completed the merger.
Colorado Blue has worked closely with the Nevada and New Mexico Blues plans for years under the umbrella of an affiliated company, Rocky Mountain Health Care Corp.
The old Rocky Mountain affiliate is separate from the new Rocky Mountain holding company and may change its name after the conversion, the company said.
