Humana, Integrating Urgent Care Purchase, Seeks Other Deals

Humana Inc. (HUM), which recently purchased a national urgent-care center operator, aims to build that business and pursue deals for other medical providers as the health insurer positions itself for a changing U.S. coverage landscape.

Humana is "actively, aggressively" pursuing provider deals, Chief Strategy Officer and Senior Vice President Paul Kusserow said in a recent interview.

"We understand doctors," he added, noting the Louisville, Ky., company's past as a hospital operator. The company is interested in "alternative site" care and, like other insurers, in joining with doctors to manage and share responsibility for the health of patient populations, he said.

Humana sees its nearly $800 million acquisition of urgent care center operator Concentra in December as a strategic move meant to gird for a major primary-care physician shortage that's expected when an estimated 32 million more people gain coverage by 2014 under the health-care overhaul.

Concentra operates more than 300 medical centers providing urgent care, wellness and other services and 240 worksite medical facilities with 1,000 primary care physicians. Humana notes that nearly 3 million of its health plan members live near one of the centers.

"We see an opportunity to build narrow networks with these guys," and to expand the company's geographic reach, Kusserow said, adding that Humana plans to put expansion capital into the centers. On Tuesday, Concentra announced it had expanded its presence in the Portland, Ore., market by acquiring five medical centers, and last month the subsidiary expanded its New Jersey presence through another purchase.

Of course, there's no guarantee of success for any deal. When Humana announced its Concentra purchase, Corporate Research Group President Carl Mercurio noted on his blog that the model of health plans employing their own staff physicians mostly didn't catch on, and said it remained to be seen whether there would be synergy in the pairing.

On the other hand, he said, he wouldn't be surprised to see other plans copy the move.

Humana sees the centers as an alternative to costly emergency-room services for patients who don't really need hospital care. The Concentra centers also are expected to come into play as Humana develops a wellness and loyalty program tied to another recent deal, a joint venture with South Africa-based Discovery Holdings Ltd. (DCYHY, DSY.JO).

Humana's Vitality wellness program, which will encourage healthy behavior by offering a discounts and rewards program, will be integrated with its individual commercial health plans as of July, Kusserow said. The company expects that members will be able to check their progress at Concentra centers.

"We're looking at ourselves as migrating into a wellness and wellbeing company," Kusserow said.

The diversification doesn't mean Humana is downplaying its health insurance core. The company, which makes most of its profit from Medicare products, sees the expansion of individual health coverage to millions more Americans as an opportunity.

"We're used to selling for individuals, so for us, this is a good thing," Kusserow said.

Humana's peers also have been diversifying as managed-care players position themselves for changes brought by the new health-coverage law. Aetna Inc. (AET), for example, recently acquired Medicity, a health information exchange technology company, and Cigna Corp. (CI) has been pursuing an international growth strategy.

-By Dinah Wisenberg Brin, Dow Jones Newswires; 215-982-5582; dinah.brin@dowjones.com

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