Coventry is going to get into the work comp case management business. Public and private sources indicate that an acquisition is in the offing, and while it may not be CorVel, it will likely include an asset with case management capabilities.
Coventry CFO Shawn Guertin recently spoke at a Merrill Lynch function, and devoted a few minutes to the company’s plans for workers comp. Here’s a paraphrasing of Mr. Guertin’s comments –
What happened in health care is now happening in WC (referring to the evolution of managed care). Coventry understands WC medical inflation is driven by lack of medical management. At this point WC managed care is an “early stage” industry of networks and med mgt. Guertin said he feels “really really good about” Coventry’s WC business, and is convinced it is a good business. It has not grown as fast as he thought, but fundamentals are there. Guertin believes they have the best WC network in the business, and are a real leader in the space.
The industry (WC managed care) is one where they will grow organically and via acquisition.
Later, Guertin commented on mergers and acquisitions, and was pretty bullish. He stated he was “very confident” they will get something done, and noted that WC managed care was on their “A list” of targets. Specifically, Coventry is looking at fee based businesses that build on their fee based business, Fairly confident they will get a deal done.
OK, so if the company is going to grow thru acquisition, who’s the target?
CorVel is logical, except the recent run-up in their stock price makes it very expensive.
Case management firm Genex has been on the block for some months now, but they have too many field case management nurses, which is a business Coventry is NOT interested in.
That leaves Concentra and IntraCorp.
Concentra is not likely – too pricey, owns clinics, already has a network, has a big field case management staff, is owned by a private equity firm who probably would want too much money, has a lot of debt outstanding.
Intracorp? The division of CIGNA has an aging and highly challenged bill review platform (Acumed) that sorely needs replacing. CIGNA has been restructuring IntraCorp, moving the group health services into the overall CIGNA structure while leaving the work comp services (case management, bill review and related services) separate.
On the negative side, Intracorp does have a sizeable field case management staff.
If a Coventry acquisition in the work comp spaceis in the works, I’m at a loss to understand the logic. Sure, the Coventry management is smart, capable, and has demonstrated their ability to run a business.
But work comp is very very different from group health, and a lot of group entities have jumped into comp only to regret the move.
Joe,
You stated Concentra is out of the question due to price. But, what about its workers comp business unit FOCUS Healthcare. Would Concentra ever consider selling this unit since it appears they are going more towards the group health model (Beech Street acquisition)?
Dave – I doubt it. Concentra also owns clinics , bill review, case management, etc. Their group health business is tiny.
and their network and bill review competes w FH; the network is the key issue.
Right on the money with your Concentra information
Concentra’s workers’ compensation managed care services and pharmacy benefit management operations will be acquired by Coventry.
Joe,
Could you please tell me that Intracorp, Corvel, Acumed, Coventry all are a single entity…?