Managed Care Firms Bulk Up

OKLAHOMA CITY -- Cigna (CI Quote) is bulking up, hoping that a major acquisition -- its largest in a decade -- will strengthen its position in the fiercely competitive managed care industry.

The health insurer announced late Monday that it agreed to pay $1.5 billion in cash, plus another $400 million in capital investments, for regional managed care provider Great-West Healthcare. The transaction will boost Cigna's health care membership by 2.2 million, or nearly 20%, and establish the company as a major supplier of health insurance to small and medium-sized businesses in the Rocky Mountain region.

Analysts pointed to the buyout as evidence of an ongoing trend, with national health insurers looking for new ways to grow -- and regional players struggling to survive -- as the managed care industry consolidates. UnitedHealth Group (UNH Quote), for instance, earlier this month inked a similar deal, buying Fiserv's(FISV Quote) health business for $775 million. ...