The consolidations have started. Humana announced it will purchase Concentra. Humana has been a health insurance carrier. Concentra, a privately held health care company based in Addison, Texas, delivers occupational medicine, urgent care, physical therapy and wellness services from more than 300 medical centers in 42 states. The transaction involved a cash price of 790 million dollars.Concentra earns about $800 million in annual revenue. Humana projects that the acquisition will add slightly to its earnings for the year ending Dec. 31, 2011. For Humana, the deal signals that the health insurer is branching back into its origins as a health care provider, but the new business would still amount to just a fraction of its overall revenue.
Humana entered the health insurance segment in 1984, and was a combination managed care and hospital company until 1993, when the company split in half - resulting in a hospital company and today's Humana. The hospital company was later sold.
"This builds on our caregiving heritage and offers new opportunity in a growing part of health care," Noland said in an interview. "The demand for primary care services will increase partly as a result of demographic trends, notably the aging of baby boomers, and also because of some of the incentives in the new health reform law."
Concentra, a privately held health care company based in Addison, Texas, delivers occupational medicine, urgent care, physical therapy and wellness services from more than 300 medical centers in 42 states. Besides its medical center locations, Concentra also serves employer customers by operating more than 240 worksite medical facilities.
Humana spokesman Tom Noland said the deal announced Monday moves the company "into promising new territory." Humana already operates a few clinics in south Florida.
More than netting immediate financial gain this may signal the first major merger stimulated by forecasts of “Accountable Care Organizations”.
Humana’s previous experience with HMOs and managed care gives it previous experience in regulating health costs. Then again this may fail just as HMOs failed to develop into what was projected, and rejected by physicians.