The leaders of Premier Inc. have signed an agreement to buy more than 900,000 provider contracts across the country which they plan to roll into an out-of-network wrap product to be paired with its health plan administration services.
Charlotte-based Premier is paying TRPN Direct Pay Inc. and an affiliated company nearly $178 million in cash for the contracts – which cover 4.1 million care sites ranging from hospitals and surgery centers to various laboratories and home and mental health providers – as well as cost containment technology developed by TRPN.
The planned acquisition, which is expected to close by year’s end, fits with the priorities Premier President and CEO Mike Alkire outlined last month for the company’s push into markets adjacent to its core supply chain and group purchasing businesses. That includes Contigo Health, which markets TPA and health benefits management services and which will package the TRPN assets into a product called ConfigureNet.
“The acquisition of these assets, which offer market-leading pricing, is expected to accelerate Contigo Health’s ability to serve additional self-funded employer health plans across the country,” Alkire said in a statement. “With an expanded footprint, Contigo Health will be better positioned to improve employee health and engagement, all with more predictable and controlled costs.”
In addition to growing Contigo’s network of providers, Alkire and his team say the TRPN deal will help them and TPA clients manage out-of-network treatments and claims with more transparency and over time develop other wrap products. Once scaled, which the Premier team expects will take three to five years, the acquisition should add between $40 million and $60 million and generated adjusted EBITDA margins of more than 40 percent.
But Premier’s TRPN acquisition also comes with some reputational risk. TRPN has come under fire in a number of states and with the Better Business Bureau for mailing to providers checks could be mistaken for claims payments but are in fact provider participation contracts. Medical associations in California, Texas and Tennessee, for instance, have in the past year and a half issued advisories about the company’s practice.
Shares of Premier (Ticker: PINC) rose about 1.5% on the news, climbing to roughly $35.75 in midday trading Sept. 7. They are essentially unchanged over the past six months.