Hu­mana di­ver­si­fies with Con­cen­tra deal

In­surer pays $790 mil­lion for Con­cen­tra

Modern Healthcare - - Front Page - Shawn Rhea

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

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