Humana bets on Florida Medicare with $500 million deal
Nov 6, 2012
The following article was published in the South Florida Sun Sentinel on November 6, 2012:
By Diane C. Lade
Humana Inc., Florida’s largest provider of Medicare private plans, continues to bet big on the government healthcare program for seniors by agreeing to buy the Boca Raton company that provides their medical services.
Humana announced Monday it will pay $500 million for Metropolitan Health Networks Inc., pending shareholder approval and passing regulatory muster. Humana also will pay off Metropolitan’s $350 million in debt, valuing the deal at $850 million.
The move gives Humana more control over costs and a hedge against anticipated reimbursement cuts, analysts said, as the company will be providing care through physicians and at primary care facilties as well as handling claims.
“You’ll continue to see us expanding and getting more involved in care coordination and the provider side,” said Mitch Lubitz, Humana’s Florida spokesman. “From our standpoint, Medicare Advantage is a strong and popular program and will continue to be that way.”
The purchase of Metropolitan is Humana’s latest foray into providing medical care. The company bought Concentra Inc. for $790 million in 2010, adding 300 health clinics in 40 states, and since has also invested in urgent-care clinics, a home- care company and other providers.
Combined with previous acquisitions, “Humana will soon employ or have strategic investments in medical practices that include nearly 2,300 physicians nationwide,” said President and incoming CEO Bruce Broussard in a written statement.
The Metropolitan deal is expected to close in next year’s third quarter.
Participation in what are called Medicare Advantage plans – privately managed HMO-style coverage funded with public Medicare dollars – has risen steadily in recent years, a trend that may continue as the first of the aging Baby boomers become eligible. Floridians in particular like the plans, with 34 percent now enrolled in the versus traditional Medicare – one of the higher rates in the nation.
Humana covers about 125,000 Broward and Palm Beach seniors and disabled adults on Medicare. Lubitz said consumers will probably see no difference under the acquisition as many of them already are receiving care through Metropolitan’s MetCare and Continucare units – an arrangement Humana and Metropolitan have had for 13 years.
Metropolitan has 35 medical centers and about 91 percent of its 87,500 patients nationwide in Florida, said spokesman Al Palombo, with most in South Florida. The majority are on Medicare with some on Medicaid, the government insurance for the poor. More than 80 percent of the company’s revenue comes from Humana, Palombo said.
Medicare Advantage providers WellCare, Coventry Health Care and UnitedHeathcare also use Metropolitan as its medical services organization. If these companies decide to stick around after the acquisition, they then in effect would be buying services from their competitor Humana.
The integrated care delivery model also allows for more quality control, Palombo said. That’s becoming critical, as Medicare increasingly is focusing on its five-star ranking system as a way to reward top performers and penalize poor ones. The stars are based on, among other things, patient satisfaction surveys and services offered.
Plans rated four stars or above by Medicare are eligible for bonuses and allowed extended enrollment periods. Humana is one of only two providers in South Florida with four-plus star plans in 2013.
Material from Bloomberg News was used in this report.
View the original article here: http://www.sun-sentinel.com/business/fl-humana-metropolitan-purchase-20121106,0,873999.story