National health insurer Humana, Inc. has signed a $245 million deal with Knoxville, Tenn.-based Covenant Health to acquire its subsidiary, PHP Companies, Inc., which does business as Cariten Healthcare.
The transaction is expected to increase Humana's commercial and Medicare Advantage medical membership by approximately 110,000, bringing the statewide total to 327,000.
The deal is anticipated to close during the fourth quarter of 2008 and is not expected to materially affect Humana's earnings guidance for the year ending December 31, 2008.
Cariten is a health benefits company serving commercial, Medicare and Medicaid members throughout the eastern half of Tennessee.
As of June 30, 2008, Cariten's medical membership included 46,000 Medicare Advantage members, 34,000 commercial fully insured members, 30,000 commercial administrative-services-only (ASO) members and 99,000 Medicaid ASO members.
The Medicaid business relates to a TennCare program contract that is scheduled to be completed on Dec. 31, 2008, and will not be renewed.
"We are confident that our Cariten customers will reap substantial benefits from the broad choice of commercial, government-sponsored and individual health insurance products that Humana will bring to this marketplace," said Cariten Chief Operating Officer Doug Haaland. "Cariten Senior Health members will benefit particularly from Humana's expertise as one of the nation's largest and most experienced Medicare contractors."
"Covenant and Humana leadership worked together to develop a relationship that will benefit employers, consumers and healthcare providers in this region," said Humana of Tennessee President Evans Looney. "Humana's national presence, local management and broad product array combined with Cariten's local market presence and knowledgeable associates will result in stronger benefit offerings for East Tennessee consumers and employers."
The transaction is subject to regulatory approvals from the Tennessee Department of Commerce and Insurance and the Centers for Medicare and Medicaid. The transaction will also require a Hart-Scott-Rodino filing with the United States Department of Justice and Federal Trade Commission and clearance from these agencies.