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Coventry and Workers’ Comp

Coventry’s acquisition of First Health represents a critical point for the WC managed care business.
As the market leader with some $190 million in annual revenues in WC bill review and network services, FH has long been a strong, and somewhat self-possessed, “vendor”. Carriers and TPAs have found FH to be inflexible, and in some cases dictatorial, regarding terms, conditions, pricing, and services. Some are hoping that the new management will adopt a more “customer-friendly” approach. Early reports from FH customers are that their FH contacts and account managers are saying the right things, but have no in-depth information about Coventry’s future plans for Workers Comp.
Coventry’s latest presentation may shed a little light on this issue. In it, Coventry notes the growth opportunities inherent in WC, the strong “bench strength” of FH WC management, strong growth opportunity in WC (mid teens to low twenty percent range), and potential for reform-driven growth.
I am highly skeptical. FH has, if not poisoned the waters with the market, at least rendered them highly distasteful. Their product offerings are primarily a large, deep discount network and a bill review system that they do not own nor effectively manage. Many payers, facing rising medical costs despite their long relationship with FH, are looking elsewhere for the next generation of managed care.
In the final analysis, Coventry’s future in WC will depend as much on the analysts’ opinions, and therefore the stock price, as anything. If analysts see no synergies, Coventry may decide to “pursue other options” with the WC assets.

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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