Preferred Health Network Inc., a health maintenance organization, announced yesterday that it has returned to its roots by selling a majority stake in itself to a group of Baltimore and Washington area hospitals.
The deal, which raised about $8 million for the Baltimore-based company that was founded by a group of hospitals, has allowed it to repay the debt owed to its former parent company. It also expands the network of hospitals available to its 44,500 members.
"We know, as we've talked to regional employers, that it's very important to be able to offer a plan that can cover employees wherever they live," said L. David Taylor, PHN's president and chief executive officer.
The deal, completed last month, also returns PHN to its beginnings as a primarily hospital-owned HMO.
The company was founded in 1986 by six Baltimore hospitals. Three years later it sold 80 percent of its stock to an Albany, N.Y., company called Novalis Corp. (which, in turn, is owned by Associated Insurance Companies Inc. of Indianapolis). Last year the six original hospital owners of PHN increased their ownership to 35 percent.
Last month, Novalis reduced its stake further, to just under 15 percent, by selling 50 percent of the company to a group of 13 hospitals, including the original six.
PHN also announced it has added six hospitals to its list of 10 preferred hospitals that accept PHN patients. And once the paperwork is completed this year, PHN members will have access to the Northern Virginia physicians and hospitals that are part of a new HMO called the Blue Ridge Health Alliance, set up by the University of Virginia, Mr. Taylor said.