UnitedHealth Group's Ingenix subsidiary said Wednesday that it is acquiring Executive Health Resources, a company that helps hospitals comply with government regulations to get reimbursed.
The acquisition fits in with Minnetonka-based UnitedHealth's strategy to beef up health services, as health reform threatens to squeeze profits in its core health insurance business.
Executive Health Resources, based in Newtown Square, Pa., has more than 1,100 customers, including hospitals, academic medical centers and specialty centers. Its "Physician Advisor" teams help hospitals comply with regulations from the Centers for Medicare and Medicaid Services and state rules to show medical necessity so they can get reimbursed.
Demand for such services will likely rise as the number of patients on government plans rises under health reform.
The acquisition will "help our clients thrive in the evolving regulatory environment for health care," said Andy Slavitt, chief executive of Eden Prairie-based Ingenix, which is UnitedHealth's data and technology arm.
The companies did not disclose the size of the transaction, but a recent Bloomberg report put discussions in the $1.5 billion region. The deal is expected to close before the end of the year, subject to regulatory approval.
UnitedHealth is looking to expand its health services businesses -- which include health information technology, clinical trials, health and wellness programs and pharmacy benefits. These businesses are less regulated than health insurance, where new rules being written under the health reform bill could crimp insurer profits.
While insurers have done well recently, thanks to lower medical costs, their long-term outlook is uncertain. Among other things, new insurance exchanges coming online in 2014 are likely to increase competition and result in narrower profit margins, according to a recent report by Edward Jones.
