Coventry Health Care Buying Preferred Health Systems
Coventry Health Care Inc. announced Monday it is buying Wichita’s Preferred Health Systems in a deal that is to close in the next 90 to 120 days, according to a statement.
The terms of the deal were not disclosed. Coventry tells investors the transaction is “expected to be neutral to earnings the first year after closing.” The company says it is entering into a long-term provider and customer relationship with Via Christi Health and its affiliates.
“I am delighted to announce this transaction, which greatly strengthens Coventry’s presence in the Kansas market,” said Allen F. Wise, Coventry’s CEO, in a statement. “PHS has established itself as a strong local-based health plan with an excellent track record of serving employer groups in the Wichita area.”
Wise says when the transaction is complete it will serve more than 1 million members in its six-state Midwest region. Via Christi said Coventry’s is willing to partner with it on transforming health care delivery, which made it an attractive buyer.
“Combining the relationships and knowledge that PHS has built in the region with Coventry’s resources and expertise will create an even stronger insurance company, thereby ensuring the continuance of a competitive health insurance marketplace,” said Kevin Conlin, VCH president and CEO, in a written statement.
Upon closing, Coventry will have full-service contracts with all Via Christi hospitals. PHS is Via Christi’s wholly owned health insurance subsidiary. It operates Wichita’s largest HMO with 62,928 Sedgwick County enrollees, according to the Business Journal’s HMO and PPO list published May 29. It also runs the sixth largest PPO with 21,155 enrollees in Sedgwick County.
Coventry ranked No. 2 on the HMO list with 3,447 Sedgwick County enrollees. It ranked No. 5 on the PPO list with 23,924 Sedgwick County enrollees. Satewide, PHS has more than 80,000 HMO enrollees and more than 40,000 PPO enrollees.
In early September, Conlin confirmed his company was exploring a sale. “We are giving thoughtful consideration to whether, in the long term, our core mission of providing quality health care services is best served by operating an insurance company as part of our health system,” Conlin said, in a Sept. 9 statement. Via Christi issued requests for proposals from potential buyers.