Coventry buys Wichita plan, adds 120,000 members
■ Kansas' insurance commissioner placed multiple conditions on the deal in response to concerns aired during a public hearing.
Coventry Health Care will take over Wichita, Kan.-based insurer Preferred Health Systems with the approval of Kansas Insurance Commissioner Sandy Praeger, but not without strings attached.
The deal, which was announced in October 2009 for an undisclosed amount, will boost Coventry's membership by about 120,000, from 5.2 million to 5.3 million.
Preferred Health Systems is a subsidiary of Via Christi Health System, a Wichita-based group of hospitals. It is the largest commercial insurer in Wichita, according to the insurance department.
Praeger announced on Dec. 28, 2009, that she had approved the sale, but with conditions. Those included requirements for Coventry to file quarterly reports on its network adequacy and to improve operations at its mental health subsidiary, MHNet Behavioral Health.
Coventry is also barred from changing rates, policies or benefits for subscribers for at least one year, and must keep an office in Wichita devoted to PHS business.
Those conditions were recommended by insurance department staff in response to reported problems with Coventry's Kansas operations. Those issues were raised at a Dec. 14, 2009, public forum regarding the sale.
Joe Davison, MD, a family physician in Wichita, said physicians generally liked PHS but are less familiar with Coventry, and some have concerns about the change.
"I still think providers are going to give Coventry a chance. I think there's going to be a period where everybody is going to see how things go," said Dr. Davison, past president of the Medical Society of Sedgwick County and president of the Kansas Medical Society, but speaking on his own behalf.
Kansas' health insurance market qualifies as highly concentrated, according to the AMA's most recent study of health plan competition. The report found Coventry and PHS together held 49% of the HMO market for the state and 84% of the HMO market in Wichita.
Coventry put out no statement related to the deal and outsiders' comments about it, and it did not return phone calls from American Medical News.