Deal to sell Health New England is off, Baystate Health says

SPRINGFIELD – Baystate Health will not sell insurer Health New England to a Boston nonprofit as previously announced and says it will be taking time to evaluate future plans.

The $165 million sale to Point32Health had already received approval from state insurance regulators and was expected to become official before the end of 2024. Baystate announced Tuesday the deal was off.

Point32Health — the not-for-profit formed by the 2021 combination of Harvard Pilgrim Health Care and Tufts Health Plan — and Baystate announced the plan back in February of 2024.

“Health New England will continue to operate business as usual, with no change to current coverage, benefits or provider network for members,” Baystate said in a statement.

Baystate didn’t rule out a future sale.

“Baystate Health will retain ownership of Health New England. Baystate Health governance and senior leadership will be taking the next few months to evaluate the strategic positioning and performance of Health New England to inform future decisions,” the release said.

Baystate didn’t respond to further questions.

Point32Health also issued its own statement. “After further analysis, Point32Health and Baystate Health will not be moving forward with the Health New England acquisition,” the statement said.

“We will continue our relationship with Baystate Health as a provider to our Commercial, Medicare and Exchange members in the western Massachusetts region. Point32Health appreciates the support and thorough review from our regulators, and we look forward to continuing to serve our members and customers throughout New England.”

Health New England has about 400 employees, many of them in a headquarters at Springfield’s Monarch Place office tower.

When the sale was announced, Dr. Mark Keroack, then-CEO of Baystate Health, said he had decided to sell the health insurer to protect Baystate’s bottom line.

The health plan is narrowly profitable, with a half percent margin, Keroack said. “The problem was, it was unpredictable,” he said this summer. “Once you spent your reserves down, then the risk of a bad year and the insurance plan could send you under. It was like carrying a risky stock in your portfolio.”

His successor, Peter D. Banko says Baystate Health needs to cut expenses and boost revenues by a combined $225 million over the next two years to regain its own financial health. It already laid off 134 employees in November 2024.

In a letter to employees dated Tuesday, Banko said the decision not to move forward does not materially impact Baystate’s financial picture nor change its “core operations transformation.”

Health New England was incorporated as a health maintenance organization in 1985.

It has about 180,000 members concentrated in Western Massachusetts.

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