Health Care

Via Christi reaches deal to sell Preferred Health Systems

Coventry Health Care and Via Christi Health said Monday they had signed an agreement for the sale of Preferred Health Systems, a Via Christi subsidiary.

They expect the sale to close in 90 to 120 days.

No financial terms were disclosed, and neither Via Christi nor Coventry would comment beyond statements they released. PHS referred questions to Via Christi.

Coventry is based in Bethesda, Md., and operates in all 50 states. Coventry Health Care of Kansas has offices in Kansas City, Mo., and Wichita.

The sale must be approved by Kansas Insurance Commissioner Sandy Praeger. Denials aren't common, but they do occur, as when the merger of Blue Cross and Blue Shield of Kansas and Anthem Insurance Co. was blocked in 2002.

Approval would leave two major players in the Wichita health insurance market. PHS is the largest commercial insurer in the area. Blue Cross is second, and Coventry is third.

Karen Vines, director of business development and client services for IMA of Kansas, said that if the sale follows similar ones, "it will take 12 to 18 months for a true blending of the companies to occur."

Gary Hardman, president of Hardman Benefit Plans, said, "I will be real surprised if they would not honor all the Preferred Health Systems contracts for this renewal cycle."

The sale would be the latest development in a health insurance landscape that has undergone significant change in the past several months.

For more than a decade, Via Christi had been the in-network provider for PHS. Earlier this year PHS announced contracts with Galichia Heart Hospital and then with Wesley Medical Center.

And Blue Cross, which had limited its network to Wesley Medical Center, signed a contract with the Via Christi.

PHS and Blue Cross have been in talks with other area hospitals as well.

Physician Ron Brown, president of the Medical Society of Sedgwick County, said it's premature to speculate on what the sale might mean to providers.

"The devil's in the details," he said. "We don't know what they're going to change or not change."

Blue Cross said the sale would have no effect on its operations or plans.

Hardman speculated that the sale could prompt another insurer to enter the Wichita marketplace.

"They'll see an opportunity," he said.

PHS, headed by Marlon Dauner, has about 240 employees and a two-story office building at Wilson Estates Office Park. It is the major sponsor of the Wichita Open golf tournament. Officials weren't available to say how the sale might affect employees or the tournament.

In deciding whether to approve the sale, Praeger will look at factors such as Coventry's financial soundness, how it will finance the purchase and its plans for PHS, said Ken Abitz, director of financial surveillance for the Insurance Department.

The Insurance Department doesn't break down numbers by county or metro area, but by written premiums, the five largest health insurance companies in Kansas are, in order, Blue Cross, United Healthcare Insurance Co., Blue Cross and Blue Shield of Kansas City, PHS and Humana Insurance Co. For companies offering health maintenance organizations, the biggest are Preferred Plus of Kansas, which is owned by PHS, and Coventry.