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MedUnite Purchases Claims System

June 4, 2001

NEW YORK (AP) _ Insurance consortium MedUnite Inc. took a major step toward creating a new Internet-based method for processing health care claims Monday, purchasing the country’s second largest medical electronic claims system from NDCHealth for an undisclosed sum.

This was MedUnite’s first major announcement since Aetna Inc., Anthem Inc., Cigna Corp., Health Net Inc., Oxford Health Plans, PacifiCare Health Systems Inc. and Wellpoint Health Networks Inc. joined forces in an attempt to simplify and quicken the claims process by creating a system all insurers and doctors could use.

``This is a big deal for MedUnite since they really haven’t done anything yet,″ said Mark Bard, director of the health practice at Cyber Dialogue. ``This gives them something to build on.″

Atlanta-based NDCHealth will receive a 17.9 percent stake in the San Diego-based MedUnite in addition to a portion of the revenues generated by the payment system. The companies will co-market the product.

MedUnite’s backers provide health coverage to 65 million Americans, or about one-third of those covered by private insurance. The service, which is currently being tested by 500 doctors, is expected to be formally introduced later this summer.

Many analysts saw the creation of MedUnite as a response to WebMD, a formerly high profile company which also has an Internet claims system for doctors. However, even though WebMD has attracted more users than the NDCHealth system, doctors and insurers have been very slow to adopt the new technology, making marketing it a challenge.

NDC is a $685 million manufacturer of information systems used by doctors, hospitals and pharmacies. About 20,000 doctors currently use the NDCHealth system, though five times that use NDCHealth’s practice management systems

Just as important, NDCHealth has relationships with many Blue Cross plans across the country as well as Medicare and Medicaid _ all potential clients for MedUnite’s system.

MedUnite president and chief executive David Cox said his company’s system will be an improvement over NDC’s because it is designed to do more than just file claims electronically. MedUnite will allow doctors to check which treatments, drugs, hospitals and specialists are covered under a patient’s plan and even will find errors before the claim is filed, he said.

About 30 billion health care business transactions take place in the United States each year, about 60 percent of which are handled by phone, fax, or paper.

While numerous companies are attempting to automate the process, few have achieved any type of significant market share, however.

Doctors have been particularly difficult to lure into the computerized billing world because most belong to small group practices that don’t have the money to purchase new equipment and the staff doesn’t have time to learn complicated programs.

One of the benefits of an Internet-based solution is that it doesn’t require a huge capital investment. MedUnite plans to make money by charging an undisclosed transaction fee.

The physician claims business is NDCHealth’s smallest division, so the company shouldn’t really be affected by the sales, said Raymond Falci, senior managing director of Bear Stearns.

``It is a good deal for NDC because there is a lot of investment needed to create a good physician payment system and now they don’t have to make it but will still benefit from their former efforts in some form,″ said Falci.

In trading Monday on the New York Stock Exchange, NDCHealth shares gained $1.44 or 4.86 percent to close at $31.10

___

On the Net:

http://www.medunite.com

http://www.ndcheath.com

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