CorVel – it’s getting a little clearer

I think I’m starting to figure this out.
Workers comp managed care firm CorVel is once again on the acquisition trail. Schaffer Companies, a Baltimore TPA, was acquired by CorVel with the deal announced yesterday. This deal follows by several months the company’s purchase of California TPA Hazelrigg, a deal that had many in the industry doing a collective head scratch.

CorVel has also been deep into the due diligence process with at least one other strong regional TPA; this deal fell apart several months ago.
The Schaffer deal is likely a large one, as the TPA has nine offices. Interesting is the way CorVel characterized the target – referring to Schaffer as a “provider of integrated medical management, claims processing and technology services for workers’ compensation clients”. That’s a bit of a stretch, but it reveals CorVel’s broader strategy to become a national TPA with a focus on medical management.
Actually, it may be a really big stretch. Schaffer’s website has little to say about the company’s managed care or medical management – it isn’t even mentioned until the end of the text in the “about” section; there is no mention at all of managed care in the home page. Moreover, several components of medical management are outsourced to another firm.
And for a firm described as a “technology company”, the website is, well, amateurish at best.
These observations are not meant to be snarky, but rather to point out that the positioning of this deal and of the acquiree (?) is clearly intended to spin this as another step in CorVel’s transformation from a managed care firm to a national medical-management focused TPA.
Interesting strategy. And extremely risky. Contacts indicate CorVel’s California business dropped off precipitiously after the Hazelrigg deal; expect the same to occur in the mid-Atlantic states in the near future. That’s too bad, as CorVel’s mid-Atlantic operations have a pretty solid reputation.
But given CorVel’s position in the workers comp managed care marketplace, maybe the best option that’s available. More on that later…