Premier Healthcare of Arizona, a rapidly growing HMO owned by a group of eight hospitals and their affiliated medical groups, will be sold to MatureWell, a company run by former InterGroup Health Plan founder Rick Barrett.
The transaction was confirmed last week by an official with one of Premier's owners, Phoenix-based healthcare system PMH Health Resources.
In a similar transaction, Miami-based AvMed Health Plan may be buying a money-losing Florida HMO largely owned by physicians (See story, p. 28).
Barrett co-founded MatureWell, a Tucson-based manager of senior healthcare benefits, in 1996, with Alethea Caldwell, veteran hospital administrator and benefits manager.
Premier's board approved the buyout deal on Aug. 24. Officials did not disclose exact terms, but MatureWell would purchase a majority of Premier's shares for cash and give Premier shareholders an interest in MatureWell, said Reginald Ballantyne III, PMH's president and chief executive officer.
The transaction is expected to be completed by the second week of September. It would require approval by the Arizona Department of Insurance, Ballantyne added.
"It was important to the shareholders to be negotiating with a company that appreciates the opportunities and challenges inherent in managed-care activity and with the ability to address rural, urban and suburban marketplaces. We went with MatureWell because of Mr. Barrett's reputation, the success he enjoyed with InterGroup, and our familiarity (with) the principals of his current company," Ballantyne said.
Premier has several contracts with MatureWell, which manages about 2,200 of its Medicare patients in northern and southwestern Arizona.
Barrett did not return phone calls seeking comment.
Premier Chief Executive Officer Jerry Marshall, M.D., said last week he could not confirm the transaction, citing a confidentiality agreement. But he did acknowledge that an announcement regarding Premier would occur soon.
In a July interview, Marshall said that Premier was looking for a buyer or partner because of capital concerns (July 20, p. 30).
Although Premier lost $1.5 million last year on revenues of about $55 million, Marshall said last week it would return to the black in 1998, netting up to $250,000 on revenues exceeding $100 million. New large group contracts had boosted enrollment beyond 50,000 as of July, up from 30,000 a year ago.
Barrett gained prominence in Arizona in the late 1970s with the formation of InterGroup Health HMO, which he grew into an enterprise with annual revenues of about $400 million before Rancho Cordova, Calif.-based Foundation Health Plan acquired it in late 1994. Barrett left InterGroup in January 1995.
Barrett began as MatureWell's chairman, with Caldwell as CEO and president, but the two exchanged titles last November to better match their individual skills to the positions, Caldwell said. Caldwell, who said she was not aware of the pending transaction, relinquished MatureWell's chairmanship in mid-August, but she remains a company shareholder.