Coventry Health Care Inc., Bethesda, Md., has agreed to pay about $1.8 billion in cash and stock for a company that manages care for workers’ comp plans.[@@]

Coventry is a traditional managed care company with 3.1 million health plan members in 15 markets in the Mid-Atlantic, Midwestern and Southeastern regions of the United States.

Coventry’s target, First Health Group Corp., Downers Grove, Ill., also manages commercial plans, but it may be better known for operating a national provider network and administering special plans designed for workers’ compensation programs.

Coventry and First Health hope to complete their deal by March 31, 2005.

The First Health deal will create a “truly national health benefits platform,” according to Allen Wise, Coventry’s president.

To finance the First Health acquisition, Coventry will be borrowing $950 million from banks.

Analysts at Standard & Poor’s Ratings Services, New York, say they are looking at the deal closely and might lower the BBB minus counterparty credit ratings S&P has assigned both to Coventry and to First Health.

“We’re comfortable with Coventry’s ability to finance the transaction,” says Joseph Marinucci, an S&P credit analyst.

But the First Health deal is far bigger than any other that Coventry has completed, and Coventry could have trouble managing a business that is so different from its own core managed care business, Marinucci says.