Magellan Health Services and Phoenix Health Plan Announce Joint Venture Development Agreement
January 19 2012 - 8:00AM
Business Wire
Magellan Health Services, Inc. (NASDAQ: MGLN) and VHS Phoenix
Health Plan, LLC, a subsidiary of Vanguard Health Systems, Inc.
(NYSE: VHS), today announced that they have entered into a joint
venture development agreement pursuant to which they will form a
joint venture to bring together their significant behavioral health
and medical management capabilities to manage integrated care in a
holistic manner to better serve individuals with serious mental
illness (SMI) in the state of Arizona. The joint venture, to be
called Magellan of Arizona, Inc., will respond to a request for
proposal (RFP) that is expected to be released by the state of
Arizona in 2012 to manage behavioral health services for the
general Medicaid population and integrated behavioral and physical
health care for recipients with serious mental illness in Maricopa
County. The RFP will likely address management services for the
population currently served in Maricopa County by Magellan under
its current contract which is set to expire on September 30,
2013.
“This joint venture development agreement is another important
step as we continue to transform the management of behavioral
health in Maricopa County and nationally,” said René Lerer, M.D.,
Magellan’s chairman and chief executive officer. “Since we began
our collaboration with the state of Arizona in 2007, we have
focused on a system that embraces the precepts of resiliency and
recovery and ensuring individual choice in all that we do. This has
proven to be very successful in Maricopa County and is recognized
as a national model for what other states can do. Our vision is
finding new solutions to better serve people with SMI by
integrating the management of behavioral and physical health care.
That’s why in 2011 we launched innovative integrated health home
pilot programs to collect information and gain experience to guide
our future plans. Now, working with Phoenix Health Plan and its
affiliates, we will be able to significantly enhance the joint
management, coordination and integration of care for the
populations we serve. This continues our commitment to innovation
as we currently provide behavioral health services to approximately
ten percent of the U.S. population.”
“Vanguard Health Systems’ mission and purpose is to help people
achieve Health for Life, and this agreement with Magellan provides
us the opportunity to continue delivering on this promise in the
state of Arizona,” noted Charles N. Martin, Jr., chairman and chief
executive officer of Vanguard Health Systems. “Serious mental
illness is a significant public health concern, and we applaud the
state for considering this holistic model of care for the
population in Maricopa County. We look forward to expanding our
service to one of our most important communities.”
“This will be an exciting joint enterprise that will help us to
continue to make a meaningful difference in the lives of the people
we serve in the local community,” said Richard T. Clarke, Ph.D.,
chief executive officer of Magellan Health Services of Arizona.
“The focus of the joint venture will be to meet the challenge of
improving life expectancy for individuals challenged with serious
mental illness. It’s a national tragedy that individuals with SMI
served by the public mental health system die, on average, 25 years
earlier than the general population largely due to treatable
conditions. In Arizona, it’s closer to 27 years earlier. That’s why
this joint venture is so important. Phoenix Health Plan has deep
medical management expertise and is a strong, respected local
presence. Bringing its strengths together with our behavioral
health management experience will help us drive better
outcomes.”
Nancy Novick, chief executive officer of Phoenix Health Plan,
added, “We have a longstanding relationship with the state of
Arizona with approximately 204,000 lives managed through our health
plan. Our intent is to leverage this experience in combination with
Magellan’s behavioral health services. We’re confident this
combination can meet the critical need the state of Arizona will
address in the RFP.”
The joint venture will be structured with Magellan Health
Services of Arizona owning 80 percent of the entity and Phoenix
Health Plan owning the other 20 percent. There is no assurance that
the state of Arizona will issue an RFP or that Magellan of Arizona
will ultimately be the successful bidder.
About Magellan Health
Services: Headquartered in Avon, Conn., Magellan Health
Services, Inc. is a leading specialty health care management
organization with expertise in managing behavioral health,
radiology and specialty pharmaceuticals, as well as public sector
pharmacy benefits programs. Magellan delivers innovative solutions
to improve quality outcomes and optimize the cost of care for those
we serve. As of September 30 2011, Magellan’s customers included
health plans, employers and government agencies, serving
approximately 31.2 million members in our behavioral health
business, 16.3 million members in our radiology benefits management
segment, and 5.5 million members in our medical pharmacy management
product. In addition, the specialty pharmaceutical segment served
41 health plans and several pharmaceutical manufacturers and state
Medicaid programs. The company’s Medicaid Administration segment
served 25 states and the District of Columbia. For more
information, visit www.MagellanHealth.com.
About Vanguard Health
Systems: Based in Nashville, Tenn., Vanguard Health
Systems owns and operates 28 acute care and specialty hospitals and
complementary facilities and services in metropolitan Chicago,
Illinois; metropolitan Phoenix, Arizona; metropolitan Detroit,
Michigan; San Antonio, Texas; Harlingen and Brownsville, Texas; and
Worcester and metropolitan Boston, Massachusetts. Vanguard Health
Systems’ strategy is to develop locally branded, comprehensive
healthcare delivery networks in urban markets. For more
information, visit www.vanguardhealth.com.
Cautionary Statement
This release contains forward-looking statements within the
meaning of the Securities Exchange Act of 1934 and the Securities
Act of 1933, as amended, which involve a number of risks and
uncertainties. All statements, other than statements of historical
information provided herein, may be deemed to be forward-looking
statements including, without limitation, statements regarding the
joint venture development agreement and the resulting joint
venture, the anticipated RFP for Maricopa County, and the business
and management outcomes of the joint venture. These statements are
based on the analysis, judgment, belief and expectation of the
management of Magellan and Vanguard Health Systems only as of the
date hereof, and are subject to uncertainty and changes in
circumstances. Without limiting the foregoing, the words
“believes,” “anticipates,” “plans,” “expects,” “may,” “should,”
“could,” “estimate,” “intend” and other similar expressions are
intended to identify forward-looking statements. Actual results
could differ materially from future results expressed or implied by
such forward-looking statements due to, among other things, changes
in, or delays in the issuance of, the RFP; the ability of the joint
venture to be awarded the contract to manage integrated behavioral
and physical health care in Maricopa County, Arizona; greater than
expected costs in connection with the joint venture; the impact of
new or amended laws or regulations; governmental inquiries;
litigation; competition; operational issues; and general business
conditions. Additional factors that could cause actual results to
differ materially from those reflected in the forward-looking
statements include, but are not limited to, the risks discussed in
the “Risk Factors” section included within Magellan’s Annual Report
on Form 10-K for the year ended December 31, 2010, filed with the
Securities and Exchange Commission on February 25, 2011, Magellan’s
Quarterly Report on Form 10-Q for the quarter ended September 30,
2011, filed with the Securities and Exchange Commission on October
27, 2011, and Vanguard Health Systems’ Annual Report on Form 10-K
for the year ended June 30, 2011, filed with the Securities and
Exchange Commission on August 25, 2011. Readers are cautioned not
to place undue reliance on these forward-looking statements.
Neither Magellan nor Vanguard Health Systems undertakes any
obligation to update these forward-looking statements to reflect
events or circumstances that arise after the date of this
release.
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