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GENEX to expand with Intracorp deal

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WAYNE, Pa.—GENEX Holdings Inc.'s agreement to purchase Intracorp's workers compensation business will not affect pricing for services, but employers could face integration adjustments, consultants said.

Wayne, Pa.-based GENEX announced last week that it agreed to purchase the workers comp and disability management business of rival Philadelphia-based Intracorp.

The deal is expected to close within weeks and GENEX CEO Peter Madeja will lead the combined business.

The two companies provide services such as utilization management, case management, medical bill review, preferred provider organization networks and specialty networks for employers, insurers and third-party administrators.

Intracorp is the nation's largest case manager, based on 2009 case management revenues of $306 million, according to Business Insurance's 2010 ranking. GENEX ranked third with $175 million in case management revenues.

Intracorp is a unit of CIGNA Corp., which will continue offering health management and wellness programs to employers and other buyers under the CareAllies brand.

GENEX is owned by Stone Point Capital L.L.C., a private equity firm in Greenwich, Conn.

Both companies derive about 80% of their business from workers comp and the rest from disability and auto liability business, a GENEX spokesman said.

One fewer case management and bill review provider will not affect the price customers pay for workers comp services because ample nationwide and regional competitors remain, said Joe Paduda, principal at Health Strategy Associates in Madison, Conn.

“The market is still oversaturated and oversupplied,” Mr. Paduda said.

But GENEX and Intracorp are similar companies, which is why Mr. Paduda said he expects the deal to result in “more talent on the street” as services get consolidated and duplicate staff is reduced.

Provider changes can cause confusion for buyers, said Rebecca Shafer, president of Amaxx Risk Solutions Inc. in Hartford, Conn. There may be differences in risk management information systems and the contacts to whom employers are accustomed could change, she said.

But those differences may be minimal, said Mike Farrand, vp and area manager in Radnor, Pa., for the strategic outcomes practice at Willis Group Holdings P.L.C.

Many GENEX and Intracorp employees have worked at both companies during their careers, so buyers may reacquaint themselves with familiar faces, Mr. Farrand said.

The deal, however, could encourage more provider consolidation as regional companies attempt to compete against the combined strengths of GENEX and Intracorp, Mr. Farrand said.

The GENEX spokesman said the company is focused on “minimizing (the integration of Intracorp) in every possible way” for customers. Most Intracorp employees, “with the exception of a limited few at the corporate level,” will be retained so customer service levels and relationships will be maintained.

Until the integration is completed, services will be provided under the GENEX and Intracorp brands, the spokesman said.

Terms of the agreement were not disclosed, although CIGNA will receive GENEX stock and remain an ongoing GENEX minority shareholder.