Charter Medical Corp. last week agreed to buy the nation's third-largest mental health management company and will change its name to Magellan Health Services to signal the new direction of the company.
The Atlanta-based chain of 103 psychiatric hospitals will buy a 51% stake in Green Spring Health Services for $73.2 million in cash and stock. Green Spring, a Columbia, Md.-based managed-care company, is owned by six Blue Cross and Blue Shield organizations: Blue Cross of Western Pennsylvania, Pittsburgh; Blue Cross and Blue Shield of Illinois, Chicago; Pierce County Medical Bureau in Tacoma, Wash.; Blue Cross and Blue Shield of New Jersey, Newark; Independence Blue Cross, Philadelphia; and Pennsylvania Blue Shield, Camp Hill.
The Blues in Chicago, Newark, Philadelphia and Tacoma will retain 49% ownership in Green Spring.
Charter is the nation's largest chain of psychiatric hospitals, and officials said the purchase will make it the nation's largest integrated behavioral healthcare system. By combining the treatment and managed-care functions into one organization, Charter hopes to capitalize on payers' tendency to carve out behavioral healthcare services to specialized vendors.
Green Spring manages mental health and substance-abuse benefits for 12 million people. The private investor-owned company has annual revenues of $265 million. Net income figures were not available.
"Magellan Health Services will be the first company to harness the most important trends in behavioral healthcare: providing access to the full continuum of care, and cost-effective, predictable outcomes for both private and public payers," said Mac Crawford, Charter's chairman and chief executive officer.
Crawford will remain at the helm of the new company, which will have about $1.4 billion in annual revenues.
Charter's hospitals will retain its name because they are "well-branded," spokesman Robert Mead said.