NU Online News Service, Jan. 2, 11:52 a.m. – Managed care companies have ended a $70 million effort to start their own electronic communications consortium by selling the consortium, MedUnite Inc., San Diego, to ProxyMed Inc., Fort Lauderdale, for $10 million in cash and $13.4 million in debt through what ProxyMed says was a competitive bidding process.
The seven founding companies had hoped that MedUnite would help encourage hundreds of thousands of U.S. physicians to file insurance claims electronically.
ProxyMed reports that MedUnite now has relationships with 30,000 doctors and generates about $20 million in annual revenue by handling 90 million health care transactions per year.
The acquisition will give ProxyMed a total of $70 million in annual revenue and relationships with 140,000 health care providers, ProxyMed says.
Observers originally viewed MedUnite as managed care companies’ attempt to ward off efforts by WebMD Corp., Elmwood Park, N.J., to dominate the physician electronic communications market. After completing the MedUnite acquisition, ProxyMed will still serve fewer physicians than WebMD, ProxyMed says.
The managed care companies that founded MedUnite are happy with MedUnite’s technology, but they believe merging the consortium into ProxyMed is the best way to encourage doctors to adopt the technology, according to Jay Gellert, chief executive of Health Net Inc., Woodland Hills, Calif., and chairman of MedUnite.
The companies that founded MedUnite are Aetna Inc., Hartford; Anthem Inc., Indianapolis; CIGNA Corp., Philadelphia; Health Net; Oxford Health Networks Inc., Trumbull, Conn.; PacifiCare Health Systems Inc., Santa Ana, Calif.; and WellPoint Health Networks Inc., Thousand Oaks, Calif.
The companies each contributed $10 million to finance the consortium, according to documents filed with the U.S. Securities and Exchange Commission.