Health Care

Preferred will stay around after sale

Preferred Health Systems likely will remain a presence in Wichita after a sale to Coventry Health Care, the head of Coventry's Kansas operations said Wednesday.

Coventry, based in Bethesda, Md., has a tradition of maintaining the names of the health plans it acquires, said Michael Murphy, president and CEO of Coventry Health Care of Kansas.

Coventry announced Monday that it had signed an agreement to buy PHS from Via Christi Health. Coventry and Via Christi said they expect the sale to be finalized in 90 to 120 days.

"We're in the process now of deciding what's the best way to integrate and operate" after the sale, Murphy said.

Coventry serves more than 5 million people nationwide.

Murphy said Coventry of Kansas, which serves all of Kansas and the western half of Missouri, insures about 33,000 people who use the Wichita market for health care.

PHS is the largest commercial insurer in the Wichita market. It has more than 100,000 commercial group risk members and 20,000 commercial self-funded members in Kansas.

Coventry of Kansas has offices in Wichita and in Kansas City, Mo. The office here has nine employees, Murphy said.

PHS has about 240 employees and an office building at Wilson Estates Office Park.

Murphy said decisions about staffing hadn't been made "other than to say we want to keep a strong service presence in the marketplace."

He said contracts and commitments in place would be honored.

"I know there's certain obligations that we have that we're going to continue, at least in the near term," he said when asked about PHS' community involvement, such as its sponsorship of the Wichita Open.

But as the health care reform debate continues, he expects more scrutiny of insurance companies and "whether we should be doing those kinds of sponsorships."

Other details remain to be worked out:

* If the PHS name is retained, would Coventry also continue to have a presence in Wichita? "That's a really good question," he said.

* How long would it take to integrate the two businesses? "One of the things we're doing right now is assessing what that would take," he said.

He said he expects the range of insurance products to increase with the sale. "I think the employers in town are hoping that's one of the benefits with this," he said.

The sale must be approved by Kansas Insurance Commissioner Sandy Praeger. Murphy said he also expected review by the Federal Trade Commission because Coventry is a publicly traded company.

He wouldn't say how long the agreement between PHS and Coventry had been in the works but said there had been no official talks until Via Christi put out a request for proposals, which was "sometime prior" to its announcement a month ago that it had done so.

Coventry has made no secret of its desire to acquire health plans, he said. He took the Coventry of Kansas post 16 months ago to expand the company locally.

When the agreement was announced Monday, Coventry's statement said the sale would give it more than 1 million members in its six-state Midwest region.

Until the sale is completed, Murphy said, "The magic phrase is business as usual. There really isn't any other choice. And I think we're just fine with that."

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