Cigna Extends Ties with Tenet Healthcare - Analyst Blog

Health insurer Cigna Corp. CI has extended its agreement with Tenet Healthcare Corporation THC to continue with its aim of providing superior health care service to its customers.

Per the agreement, Cigna's commercial customers and Cigna-HealthSpring's Medicare Advantage customers will have in-network access to Tenet's health care providers which include – 77 hospitals, 190 outpatient centers and more than 1,500 employed physicians.

In-network providers offer service on pre-agreed terms and have preset billing rates. Service from in-network providers prove advantageous for members in terms of cost and quality.  

Cigna's agreement with Tenet also entails payment to the hospital on the basis of quality of care (pay-for-quality). The standard of quality will be measured by Cigna as per national quality benchmarks established by the Centers for Medicare and Medicaid Services.

Tenet and Cigna will also establish a Cigna Collaborative Care arrangement in Atlanta in July. Cigna Collaborative Care is built on the same platform as its Collaborative Accountable care arrangement. While Cigna Collaborative Care will include small physician groups, specialist groups and hospitals, in addition to large physician groups, the other is essentially a collaboration of large physician groups and integrated delivery systems.

Cigna's agreement with Tenet reflects its commitment to work with hospitals, ancillary facilities, physicians and other health care professionals to help ensure that its customers have access to quality services and benefits.

Cigna is a niche player in the U.S. health insurance industry and has always focused on providing superior service to its members. The company is also nicely navigating the tide created by a host of new changes created by the health care reform act. Earlier this month,  the company reported first-quarter earnings of $1.83 per share, handily beating the Zacks Consensus Estimate of $1.53. Cigna's better-than-expected earnings came from strong contribution from all its business segments.

Going forward, we expect the company to benefit from its vast provider network and superior servicing capabilities.

Cigna currently holds a Zacks Rank #3 (Hold). Meanwhile, better-ranked players Horace Mann Educators Corp. HMN and Old Republic International Corporation ORI are good investment options. Both stocks sport a Zacks Rank #1 (Strong Buy).