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The Coventry deal is done.

After weeks of speculation – most of it pretty accurate – it’s official.

In one of the more impactful transactions we’re likely to see this year, CVS/Aetna has agreed to sell Coventry Workers’ Comp Services to Mitchell/Genex. Terms haven’t been disclosed. Press release is here

The deal isn’t official until it’s passed thru any and all regulatory hoops. I doubt very much there will be any problems as the current Administration isn’t interested in doing much of anything to interfere with business.  Sources indicate current Coventry leader Art Lynch will report up to Peter Madeja; as noted here before I’m a big fan of Peter’s.

Oldsters will recall that Aetna tried to sell Coventry at least twice.  Both times the deal didn’t happen because the owners didn’t understand the critically important issue – who owned the network contracts.

After the last debacle, Aetna went back and converted (almost) all the Coventry provider contracts to Coventry paper, so the network contracts convey with the sale of Coventry. Since it’s the network that drives the majority of profits, this was a have-to.

In addition to the network itself, Coventry has a bunch of other assets – PBM FirstScript, a bill review business, case management and UR, and other stuff.


Data is a huge asset, and one that should create a lot of value for Coventry and its customers. As the largest network, one of the largest bill review entities, and with decades of transaction history, the company has the information it needs to build a much more effective network…effective defined as “one that delivers lower net cost for its customers.”

In an HSA survey of 15 big payers’ views of provider networks, Coventry garnered the top spot in terms of market acceptance and respondent ranking. It is certainly the largest in terms of share despite chronic under-investment by owner Aetna.  Now that Coventry will be owned by a workers’ comp entity run by people who know workers’ comp, I’d expect a pretty significant investment into the core asset – the PPO.

That will undoubtedly include building and staffing a network contracting and management capability – from scratch. Certainly M/G will be able to use Aetna’s technology and perhaps contracting/credentialing resources for some time, and equally sure M/G will do everything possible to build that network management capability quickly and well.

If they do it right, customers should see improved results in the form of lower facility costs.

The First Script PBM is the next biggest asset.  It has also suffered from underinvestment for years. Given the continued decline in work comp drug spending and the need for millions to invest in PPO network infrastructure, it wouldn’t be surprising if the new owners focused their interest elsewhere.

Genex’ bill review operation is a big player, and the addition of Coventry’s BR operation will add even more scale. One question – what to do about the BR platform?  Coventry is a big Stratacare user which presents a bit of a dilemma as the new owner is a direct competitor.

Then there’s case management, UR, and other related services.  These can be readily integrated into Genex’ current service portfolio and will strengthen the company’s breadth and scale. Expect Genex to leverage this to expand relationships with national payers.


The transaction marks the latest in a long list of mergers and acquisitions in the workers’ comp services business. We are nearing the end of a decade-long consolidation – there are just not that many large assets left, the industry is not that interesting due to structural issues, and fewer assets = higher prices.

Payers should see better results from a Coventry network run by people who understand work comp and are willing to invest big dollars into building a much more effective network.

Conduent’s leadership may be thinking thru implications as well as there’s a bit of channel conflict.  As the largest (by market share) WC BR application vendor is rumored to be in this for the long haul, I strongly doubt Conduent will be having second thoughts about partnering with the largest WC PPO.


3 thoughts on “The Coventry deal is done.”

  1. Mitchell/Genex bought Priority Care Solutions (PCS) a little while back. With Coventry already doing the same thing what do you think will happen?

    1. Hello Rick – I’d expect the similar services will be merged into one operation – more efficiency, reduces overhead, produces “synergies” that drive margin.

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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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