Aetna to Acquire Medicity

Aetna announced today that it has entered into an agreement to acquire Salt Lake City-based Medicity, a health information exchange technology company for approximately $500 million. Financing for the deal is expected to come from Aetna's available resources. The transaction is subject to customary closing conditions, including Hart-Scott-Rodino antitrust regulatory approval, and is projected to be neutral to Aetna’s financial results in 2011. Medicity will operate as a separate business within Aetna, under its existing leadership structure, the insurer says.

“This acquisition will enable Aetna to offer a set of convenient, easy-to-access technology solutions for physicians, hospitals and other health care providers. That, in turn, can help improve the quality and efficiency of patient care,” says Mark Bertolini, Aetna CEO and president. “Strategically, we believe this acquisition will enhance Aetna’s capabilities and accelerate our growth in the health information technology and health information exchange space.”

Medicity offers a broad range of products and services that enable health systems, hospitals, physician practices and health information exchanges to securely access and exchange health care information, improving the quality and efficiency of patient care and reducing unnecessary health care costs, Aetna says. The health information exchange (HIE) solutions provider markets its products and services locally, regionally and nationally.

“It is a strategic move for health plans such as the Aetna's and United's of the world to invest in an HIE technology," says Kunal Pandya, Aite Group senior healthcare analyst. "It not only helps their providers improve the metrics related to patient care, but also provides a value-added services and contractual negotiations with providers within their network. It could also provide additional incentives to health plans to be able to gather some firsthand data relating to patient medical information which would at some level help with formulating an operational strategy around the new medical loss ratio policies as mandated by healthcare reform.

“With the new EMR rules going into effect by 2012 and providers having to avail of the technology by 2015 to receive tax benefits and subsidies for their practices, this is a big value for them,” Pandya adds.

Medicity’s connected network provides collaboration and coordination of care delivered through a variety of communications tools, which helps physicians and other health care providers get timely clinical information about patients using the platform of their choice. Medicity’s HIE technology reaches more than 760 hospitals, 125,000 physician users and 250,000 end users.

“We are excited about joining Aetna, with the shared vision for improving the health care experience for all stakeholders,” says James Lassetter, M.D., Medicity chairman and CEO. “The combination of Medicity’s connected health care platform for providers with the clinical decision support capabilities of Aetna’s ActiveHealth Management subsidiary can help physicians make better decisions in real-time as they collaborate and coordinate care."