Aetna will be Coventry’s workers comp network in 19 states. As I reported last week, the deal replaces Coventry’s underperforming networks with AWCA’s offering, strengthening Coventry’s lead in the WC managed care business while eliminating it’s toughest competitor.
Coventry had been losing ground to Aetna, with the Hartford and Liberty dropping the First Health network in multiple states in favor of AWCA. With Coventry now the distributor for AWCA, payers will have a single contact – one with a Coventry business card.
Some are protesting that the deal will result in a loss of competitiveness in the market, and predict action by the FTC or some other regulatory entity. Not happening. If the Concentra-Coventry deal made it thru the review process, this distribution arrangement is not going to elicit any reaction either.
This is a great deal for Aetna – they are going to dramatically increase their WC revenues and share overnight. While they have to share revenues with Coventry, 50% of something is a heckuva lot better than 100% of nothing. And with AWCA’s growth hampered by payers’ incredibly slow decision making processes, it was an open question as to whether some payers would ever get their act together.
For the payers lamenting the disappearance of ‘choice’, perhaps if you have moved faster you wouldn’t be reading this.
I worked for Coventry for several years and I can say with great confidence they will cut their own throat with their IT leadership, especially with a leader whose last name rhymes with toga.
Does this foretell of a future global merger of Coventry and Aetna? Coventry has been mentioned as a prime acquisition candidate for the last 5-6 quarters by the Wall Street gurus. Given the workers comp deal, it’s hard to ignore the larger ramifications.