More from the Coventry investor call last week…
Coventry views its businesses as in two main sectors – health plans or specialty businesses. Workers Comp and Medicaid are the specialty businesses.
CEO Dale Wolf sees substantial growth in 2006 in WC. According to Wolf, Workers Comp will grow from $215mm (Estimated) in 2005 to $240mm in 2006. While I guess anything is possible, I’m somewhat surprised about the level of optimism given First Health’s recent difficulties in the WC arena. On top of their losses at the Hartford and elsewhere, another large carrier has just moved a major state away from First Health. While I don’t pretend to know all that goes on with their new business and renewals, sources also indicate that renewal contracts are being negotiated on terms somewhat less favorable to FH.
FH’s bill review and network customers are large insurers and TPAs. Wolf views Coventry’s WC sector as a nicely profitable business with a dominant market position, based on what he views as the leading network in the country. The slides accompanying the presentation indicated Coventry is expecting a 12% growth rate in 2006. Again, I’m sure he knows a lot that I don’t. Or perhaps the market knows a few things that have not yet hit the executive suite at Coventry…
Notably, Wolf stated that Coventry will invest additional capital in this business.
My view is FH, which is yet to name a leader for the WC business unit, will be significantly challenged by Aetna which is gaining traction amongst payers for its very strong discounts and more approachable style. If Kaiser can promote its excellent On-the-Job program, United gets its act together, and the Blues make any additional inroads into WC, FH will have a real battle on its hands.
What does this mean for you?
The drive for top line from Coventry may help WC payers negotiate deals on more favorable terms as FH seeks to replace lost revenue from major insurers.
Jan
19
What do you think the stock price range would be for Concentra if it went public?
I have no idea – depends on number of shares, offering terms, etc. Are you asking about market cap?
Just a quick comment about Aetna’s ‘deep discounts’ on the work comp side. As a FL provider I received and ‘opt out’ amendment for Aetna’s work comp product at 80% of the state fee schedule. I called Aetna to discuss…no return phone call. Sent an e-mail and a fax…no response. Then received a ‘as a member of Aetna’s Work Comp Network’ notice. Aetna may not really have the work comp network they think they have!