NU Online News Service, Aug. 22, 2003, 5:13 p.m. EDT – The U.S. Department of Defense has picked three companies to manage Tricare, its program for providing health care for 8.7 million military personnel, veterans and dependents away from military bases and veterans health care facilities.
The companies winning the five-year contracts? which have a potential combined value of about $27 billion, are TriWest Healthcare Alliance Corp., Phoenix, and units of Health Net Inc., Woodland Hills, Calif., and Humana Inc., Louisville, Ky.
All three companies already participate in the Tricare program. TriWest has been handling Western states, Humana has been handling Southern states and Health Net has been handling Midwestern states.
The Defense Department shut out a fourth Tricare program participant, Sierra Health Services Inc., Las Vegas, which has been running the Tricare program in the Northeast. The department has awarded the rights to the Northeastern states to Health Net but shifted five Western states that Health Net has been handling into TriWest’s domain.
Health Net expects its Tricare revenue to remain roughly constant. But, if the contract decisions stand, Sierra could lose about one-third of its annual revenue and the source of about 10% of its operating profits, Sierra says.