Dive Brief:
- Ascension is selling its ownership stake in Mercy Care, a Medicaid insurer in Arizona, to CVS Health-owned Aetna as the nonprofit hospital giant continues trimming its portfolio.
- Ascension has co-owned Mercy Care along with CommonSpirit’s Dignity Health since the managed care nonprofit was founded in 1985. But Aetna has overseen Mercy Care’s day-to-day operations and administration since 2002, according to a spokesperson for the insurer.
- Terms of the deal weren’t disclosed. The companies have not set a specific closing date for the sale, which is currently pending regulatory approval.
Dive Insight:
It’s the latest divestiture for Ascension, which continues to reorient its business following years of financial losses underpinned by rising expenses and a massive cyberattack in 2024.
Ascension has sold a number of hospitals and acquired an ambulatory surgery provider, AmSurg, as it focuses more heavily on outpatient care. The nonprofit has also trimmed its insurance businesses, pulling out of Texas’ Affordable Care Act market in 2024 and selling its stake in insurer Network Health to Froedtert Health in 2023.
These actions helped Ascension claw its way back into the black in 2025, and grow its income since. The health system reported $1.5 billion in net income for the 2026 fiscal year, up from $918 million the year prior.
Now, Ascension is waving goodbye to yet another business: Mercy Care, which covers approximately 404,000 members across Medicaid and dually eligible plans in Arizona.
Mercy Care is profitable, reporting $34 million in income last year, according to tax documents.
But providers, even those with a long history of operating health plans, are increasingly washing their hands of insurance, put off by mounting medical expenses and perennial regulatory uncertainty. This year has seen a number of insurance exits from integrated healthcare providers like Providence and Baylor Scott & White, while regional and national carriers alike have similarly streamlined their businesses to focus on higher-margin areas.
Aetna is no different. The insurer, which covers some 26 million people, pulled out of the Affordable Care Act marketplaces for 2026 and scaled back its Medicare Advantage business in a bid to resuscitate flagging profits. The cutbacks, along with other tweaks to its insurance plans, sent Aetna’s income soaring this year — though the payer is once again taking a careful approach to ensure costs will remain contained in 2027.
An Aetna spokesperson did not respond to questions on how purchasing Mercy Care fits into its overall strategy. But the insurer’s more than two decades of administering Mercy Care means Aetna is highly familiar with the insurer and its members, reducing the risk that normally comes with purchasing a new health plan.
In addition, Mercy Care’s standing as a dual special needs plan serving beneficiaries enrolled in both Medicare and Medicaid could have made it an appealing acquisition target.
Insurers tend to favor dual special needs plans because they are highly profitable compared with standard MA plans. Beneficiaries are typically more medically complex, so the government pays more to cover their care. Aetna has been doubling down on these plans in recent years.
