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12/7/2010
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Aetna To Buy Medicity For $500 Million

Medicity's iNexx platform, which connects to clinical, administrative and financial networks as well as electronic medical records and practice management systems, bolsters Aetna's health information exchange capabilities.

Aetna announced Tuesday that it will buy Medicity, a health information exchange (HIE) vendor, for approximately $500 million. The move continues a growing trend among health insurance companies to acquire technology that will help them meet new business requirements as the nation's healthcare systems undergo a significant transformation.

According to Aetna executives, Medicity has experienced strong growth in recent years and has the largest installed base of enterprise HIE systems for hospitals, physicians and other health care providers, diversified among state, regional and national clients. Medicity's HIE technology reaches more than 760 hospitals, 125,000 physician users and 250,000 end users.

Additionally, Aetna officials note that they are operating on the assumption that the healthcare reform law passed in March, which set the goal of providing health insurance to 32 million uninsured individuals over the next decade, will continue to be implemented, despite recent calls for repeal of the law among elected members of the Republican Party.

"We are moving forward under the assumption that the new healthcare reform regulations are the law of the land and operating accordingly," Fred Laberge, a spokesman for Aetna, told InformationWeek. "The acquisition, therefore, is a strategic response to the regulatory changes and financial pressures being felt by health care systems as they move toward integrated models of care and payment."

As the healthcare industry accelerates the adoption of electronic health records, health information exchanges and other technologies, Lynne Dunbrack, program director at IDC Health Insights, said payers are continuing to acquire technology companies, especially vendors with provider-focused products, to round out their technology offerings to their provider constituents.

Dunbrack said Aetna will benefit from Medicity's iNexx platform which connects to clinical, administrative and financial networks as well as electronic medical records and practice management systems. She also pointed to the August acquisition of Axolotl by Ingenix, which is owned by UnitedHealth Group as another example of a payer building its technology capabilities through a buyout and noted that HIE market consolidating is continuing.

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