Money-losing HealthPartners of Arizona, one of the nation's largest hospital-owned HMOs, is selling to United HealthCare Corp. for a reported $235 million.
The deal, announced late last week, is a harbinger of the fate of many Medicare provider-sponsored organizations. Many experts believe hospitals and doctors that get into Medicare risk contracting as PSOs eventually will tire of the insurance business and sell to national for-profit managed-care firms (See cover story, p. 58).
HealthPartners is owned by Samaritan Health System of Phoenix and TMC HealthCare, an affiliate of Tucson (Ariz.) Medical Center. The 519,000-enrollee plan lost nearly $12 million last year (See chart). Of those enrollees, 25,900 are serviced under a Medicare risk contract.
MODERN HEALTHCARE disclosed the pair's plan to sell the 3-year-old managed-care company last month (May 4, p. 4).
Under the HealthPartners of Arizona umbrella, the two systems operate HealthPartners Health Plans, the HMO; 2,800-doctor Arizona Physicians IPA and an affiliated Medicaid health plan; HealthPartners Insurance Co., a traditional indemnity health insurance division; and HealthPartners, a third-party administrator.
United, a Minneapolis-based for-profit managed-care firm, is paying $235 million for the entire HealthPartners of Arizona operations, the Arizona Daily Star reported.
The parties would not comment specifically on the deal's value, but Dan Green, Samaritan's vice president of communications, said that figure is "very close."
The Arizona Department of Insurance, HCFA and either the Federal Trade Commission or the Securities and Exchange Commission must approve the deal, both United and HealthPartners officials said.
The sale is expected to close Sept. 1.
The deal comes on the heels of United's plans to acquire Humana in a deal valued at more than $5 billion that may raise some antitrust concerns (See related story, p. 22).
The United-HealthPartners deal would create the largest health plan in Arizona, where United already has 160,000 managed-care enrollees.
HealthPartners was formed in 1995 by the merger of health plans operated by Samaritan, which owns seven hospitals in Arizona and California, and TMC, the parent company of 432-bed Tucson (Ariz.) Medical Center. They own equal stakes in not-for-profit HealthPartners.
Because the plan grew to more than half a million enrollees in such a short time, HealthPartners faced enormous capital needs, estimated to be as much as $70 million over the next three years.
Last October, HealthPartners' board of directors said it would seek a capital partner or buyer.