Premier, Inc. subsidiary Contigo Health, LLC, a provider of comprehensive services that optimize employee health benefits, announced an agreement to acquire key assets from TRPN Direct Pay, Inc. and Devon Health, Inc. (collectively, TRPN) for $177.5 million in cash.
Acquired assets will include contracts with more than 900,000 providers across 4.1 million U.S. locations, including acute care hospitals, surgery centers, physicians, ancillary facilities, MRI centers, laboratories, radiology centers, urgent care clinics, home health services, durable medical equipment suppliers, chiropractors, physical therapists and mental health practitioners. Under the terms of the agreement, Contigo Health also will license TRPN’s proprietary cost containment technology.
Contigo Health, which collaborates directly with self-funded employer health plans and health systems to improve employee access to high-quality healthcare, plans to leverage the acquired TRPN assets to develop the provider contracts into a new out-of-network wrap product named Contigo Health ConfigureNet. This new product is expected to complement and help grow Contigo Health’s health plan administration products, improving access to quality healthcare and reducing the cost of medical claims through pre-negotiated discounts with its network providers. Claims will be aligned to the network provider’s contracted rate through an electronic data interchange to help ensure a rapid and seamless process for health plans and providers alike.
“Premier is committed to high-quality, low-cost care for the millions of people receiving health coverage from their employers,” said Michael J. Alkire, President and CEO of Premier. “The acquisition of these assets, which offer market-leading pricing, is expected to accelerate Contigo Health’s ability to serve additional self-funded employer health plans across the country. With an expanded footprint, Contigo Health will be better positioned to improve employee health and engagement, all with more predictable and controlled costs. At the same time, we believe the resulting wrap product will further differentiate Premier members and other health systems as high-value care networks for employers.”
“Contigo Health is relentlessly focused on optimizing care through innovative models and collaborations between health systems and employers,” said Steven Nelson, President of Contigo Health. “We anticipate this acquisition will help bridge the gap between quality care and geographic constraints and allow self-funded employer health plans to manage costs while offering more flexibility to their employee plan participants.”
Expected Benefits of Transaction
When combined with Contigo Health’s high-touch, personalized approach to third-party health plan administration products, the Contigo Health® ConfigureNet™ out-of-network wrap will provide key capabilities that are expected to enhance Contigo Health’s value proposition.
Benefits of the transaction are expected to include:
Increased provider access: A national wrap-network solution is a competitive differentiator that is expected to accelerate Contigo Health’s ability to expand its current offerings, including Contigo Health Sync Health Plan™ third-party administration products and Contigo Health Sync Health Plan™ business process outsourcing for self-funded employer health plans.
Better management of out-of-network claims: Additional provider contract assets will enable Contigo Health to offer solutions to help self-funded employer health plans manage out-of-network claims with a differentiated, transparent approach to cost and quality for employers, employees and healthcare providers.
More flexibility to employers: With the acquisition of these key assets, Contigo Heath plans to create additional and customized wrap network product options to meet the emerging needs of self-funded employer health plans.
The transaction is expected to close in the second quarter of fiscal 2023, subject to customary closing conditions and regulatory clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Premier currently anticipates the transaction to generate adjusted earnings per share accretion of $0.01 to $0.02 in fiscal 2023. In addition, the company expects the transaction to result in $40 million to $60 million in incremental annual net revenue and contribute 40 percent to 50 percent in adjusted EBITDA margin once fully scaled in the next three to five years.