Humana, the nation’s sixth largest health insurer by membership, on Monday said it sold its subsidiary Concentra for $1.05 billion in cash to MJ Acquisition Corp., a joint venture between long-term acute hospital operator Select Medical Holdings and the private equity firm Welsh, Carson, Anderson & Stowe.
Select Medical Holdings is a publicly-traded network of 113 long-term acute care hospitals and 16 acute medical rehabilitation hospitals in 28 states operating under brand names like NovaCare.
“Though Concentra’s operations did not ultimately align with Humana’s strategy as well as we had originally anticipated, we believe Humana and Concentra have gained valuable insights into consumer behavior over the past several years that will serve us both well moving forward,” said Humana CEO Bruce Broussard in a statement. “We expect Humana will continue to invest in other primary care assets, including MSOs, as we continue to expand our integrated care delivery model.”
The deal comes five years after Humana spent $790 million to buy Concentra, a network of 300 urgent care and physical centers and 245 work-site clinics in 38 states. At the time, the acquisition seemed like a reprise to the Louisville-based insurer’s roots in direct patient care, when it was one of the largest hospital and nursing home operators in the 1970s and 1980s.
Humana acquired Concentra to expand into primary care practices and medical service organizations. In 2012, Humana also acquired Metropolitan Health Networks, a primary care and specialty clinic network based in greater Boca Raton, home to many of the company’s Medicare Advantage members.
But Humana said it refined that strategy in the past few years, leaning more on primary care than Concentra’s focus on occupational injuries. Humana leaders had promised investors a portfolio review and Concentra, with $1 billion in revenue last year, was ripe for sale.
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The acquisition of Concentra is expected to close in the second quarter of this year and should be seamless for employees and customers, said Ted Bucknam, the company’s president.
The deal highlights the boom of retail health — and the opportunity for consumers like Walmart and investment firms, as hospital systems play catch up. The market for walk-in and urgent care clinics is expected to grow to $18 billion by 2017, up from $13 billion in 2011, according to the Urgent Care Association.
Welsh, Carson, Anderson & Stowe, a $20 billion private equity firm, was actually the majority owner of Concentra from 1999 until Humana bought it. Other healthcare deals by the firm include the 2010 sale of U.S. Oncology to McKesson, for $2 billion, and the recent sale of a majority stake of United Surgical Partners International to Tenet.