Humana diversifies with Concentra deal
Insurer pays $790 million for Concentra
In a move to diversify its revenue sources, insurer Humana said last week that it will pay $790 million to buy Concentra, a medical-services company providing care through work-site and freestanding clinics in 42 states.
The move, deal watchers said, is likely to be duplicated by other insurers as payers seek to stave off expected shrinking profit margins brought on by HHS’ newly issued medical loss ratio rules. Set to take effect in 2011, the rules will require payers to spend 80% to 85% of collected premium dollars on patient care. Payers who don’t meet the criteria would have to refund a portion of member premiums.
“I think there are a lot of reasons payers are going to look at the provider side, including revenue concerns,” said Beth Essig, a healthcare attorney with Epstein Becker & Green. “But also, a deal like this allows them to get control over their costs. It lets them start to direct the healthcare their insured are receiving.”
Under the deal, Humana will pay $790 million in cash to acquire Concentra. In return, the insurer will gain 308 freestanding clinics, 240 work-site clinics and 650 primarycare physicians who are under contract to the provider. Concentra’s leadership, including its CEO Jim Greenwood, is expected to remain in place, officials at both companies said.
Paul Kusserow, senior vice president and chief strategy officer for Humana, said the insurer expects to benefit on multiple levels from the acquisition. Benefits include