Humana hungry to buy provider-owned health plans

Humana is looking to buy more provider-owned health plans this year, according to CEO Mike McCallister, who spoke about his plans at the J.P. Morgan Healthcare Conference.

Humana has already made some significant investments in this niche. Last year, it picked up OSF Health Plans of Peoria, IL, for $90.5 million and PHP Cos/Cariten Healthcare of Knoxville, TN, for $245 million, both in all-cash deals.

When prowling for acquisitions, Humana looks for plans in second-tier cities that can give it a strong position in the larger metro. For example, its buyout of OSF Health Plans gave it access to 2.5 million consumers in the Peoria metro, though the plan itself has only about 78,000 members.

This values the members at almost $1,200 per person--a number Humana is willing to pay because it can now pitch products to the 2.5 million greater Peoria citizens more easily, McCallister said.

To get more background on Humana's plans:
- read this Modern Healthcare piece [1] (reg. req.)

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