N.Y. Private Equity Firm Acquires GlobalHealth
The following article was reported by the The Oklahoman
Reporter: Paula Burkes
A private equity firm in New York City has acquired Oklahoma City-based GlobalHealth Inc. insurance company. GlobalHealth CEO said the deal will help them expand services and lower costs.
A private equity firm in New York City has acquired Oklahoma City-based GlobalHealth Inc. insurance.
The sale to Kinderhook Industries was announced Wednesday by Allegiance Capital Corp., the Dallas-based mergers and acquisitions investment bank that facilitated the purchase. Financial terms were not disclosed.
GlobalHealth Chief Executive Scott Vaughn said the acquisition will allow his company to offer health insurance to more Oklahomans and lower the cost of health care.
His company, Vaughn said, needed more cash reserves to satisfy the state Insurance Department’s higher requirements for regulatory capital should it meet its goal of covering more lives, and also to acquire private physician practices, a strategy GlobalHealth has found results in more efficient, affordable care, he said.
GlobalHealth, which employs 230 with annual revenues of $170 million, offers the most popular, and lowest-cost insurance plan — a home maintenance organization — among state employees. In addition to the 40,000 lives it covers through that plan, GlobalHealth in January 2013 began offering Medicare Advantage plans and, in October, became one of five companies offering insurance in Oklahoma’s new federally-run online health insurance marketplace.
To date, GlobalHealth has sold individual policies covering only about 1,000 lives in the new marketplace, “But we want to make our insurance available to as many Oklahomans who want it,” said Vaughn, who expects double-digit annual growth this year.
GlobalHealth’s provider network for policyholders covers about 75 percent of the state’s counties, he said.
Vaughn believes his company can gain more individual market share through its customer service. “Live persons answer the phone when you call us for help with issues,” he said.
The company also strives to better manage care and subsequently costs, he said, through case managers who frequently check in, and monitor medication and other compliance, with the 20 percent of diabetic and other chronically-ill patients responsible for 80 percent of the costs.
In addition, GlobalHealth has found it can deliver more efficient, better care through affiliations with and acquisitions of primary care practices. Its longstanding affiliation with doctors at the Oklahoma City Clinic, and purchase of physician Casey Hanna’s Wagoner practice last year — show 20 percent lower costs in those populations, Vaughn said.
GlobalHealth’s unique delivery model and the significant changes to the U.S. healthcare industry create a tremendous opportunity for the company to offer affordable health plans to more citizens in Oklahoma, said Chris Michalik, managing director at Kinderhook.
“Under Scott’s leadership, GlobalHealth has served its members very well and has made great strides toward bending the healthcare
cost curve through its common sense approach to healthcare delivery,” Michalik said.
Founded in 2003, Kinderhook has $770 million of committed capital. Among the 18 companies in its current portfolio, GlobalHealth is the only Oklahoma-based company and the only insurance company. Officials said GlobalHealth is the company’s 18th purchase in the healthcare services industry, including three other current holdings: E4Health, a Dallas-based provider of employee assistance programs; Clinical Research Advantage trial management organization and Longevity Alliance, an insurance marketing services organization.
Allegiance Capital worked with GlobalHealth to conduct an extensive two-year search for a potential partner with HMO experience, a strong financial background and GlobalHealth’s vision to provide high quality, affordable health insurance.
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