In a year filled with mega-mergers and consolidations among home-care providers, the latest deal may involve Caremark International selling its home infusion business to W.R. Grace subsidiary National Medical Care.
Industry sources said the two companies recently discussed the possible sale of Caremark's home infusion busi-ness, which is the largest of its kind operating in the United States.
W.R. Grace's National Medical Care, based in Boca Raton, Fla., is the third-largest U.S. home infusion provider.
Caremark and W.R. Grace executives declined to comment on the reports. However, industry observers say such a deal, if implemented, could benefit both companies in the long run.
"The idea makes sense," said Ethan Leder, managing director of Leddel Capital Partners, a Washington-based healthcare investment fund. "Caremark seems to be focusing much of its efforts and resources on building a physician services and managed-care organization. And (W.R.) Grace has clearly indicated its intentions to grow in the home infusion field. They have the capital to do it."
Reports of the possible sale come one month after Northbrook, Ill.-based Caremark announced it would alter its business relationships with physicians to comply with a soon-to-be-implemented federal law intended to prevent abuse of patient referrals (Oct. 3, p. 56).
Caremark's controversial business relationships with physicians are also the subject of an ongoing federal criminal investigation. At issue is whether the company violated federal law by paying physicians illegal kickbacks in exchange for patient referrals to its home infusion business. Caremark has denied any wrongdoing.
Home infusion remains the largest component of Caremark's patient-care services division. The company does not provide a specific breakdown, but in 1993, the division accounted for approximately $1 billion in revenues. The the area of greatest growth at Caremark, however, appears to be its managed-care division, which accounted for the balance, or 43%, of its $1.8 billion in 1993 revenues.
Caremark's managed-care division includes physician practice management and prescription drug benefits services.
The company's patient-care division increased only 7% in 1993.
W.R. Grace's National Medical Care home-care subsidiary, meanwhile, has publicly stated that it intends to continue developing its home infusion component. National Medical Care operates in 100 U.S. markets.
National Medical Care also provides kidney dialysis and related services through 501 outpatient centers nationwide.