First Data Corp., once a familiar name in healthcare information systems, is exiting another healthcare-related market, this time in third-party claims administration.
The Hackensack, N.J.-based giant in the credit-card processing and payment instruments businesses agreed to sell two of its units, First Health Strategies and First Health Services, to Healthcare Compare, a provider of medical cost management services, for $200 million.
The two units provide administrative services to corporate and Medicaid customers, including integrated claims administration, data analysis and medical case management.
Downers Grove, Ill.-based Healthcare Compare said the deal will complete its range of services necessary to cover the managed-care spectrum for group health customers.
Founded in 1992, First Data had achieved high visibility in healthcare through a Charlotte, N.C.-based information systems group that marketed products for administrative and clinical data capture, transfer and storage.
But in May 1995, the company abruptly decided to get out of the business, selling the healthcare unit to HBO & Co. and announcing it would concentrate on the proliferating transaction processing business.
A month later, First Data announced a merger with Atlanta-based First Financial Management Corp., another transaction-processing giant. That bolstered its core business but also brought in the First Health operations-both units of First Financial-just as the healthcare systems unit was shipping out.
With the sale of the First Health units, First Data will continue to operate two smaller healthcare units, including VIPS Healthcare Information Solutions, a Towson, Md.-based developer of decision-support systems and claims automation tools.
Earlier this year, Atlanta-based Equifax also sold off its healthcare processing and analysis businesses after a two-year flirtation with the industry, deciding similarly to put its money on electronic commerce.
One of the buyers was Atlanta-based National Data Corp., a payment systems processor that's taking the opposite approach of First Data and Equifax and buying further into the healthcare claims and information systems businesses.