Equitable, HCA Agree on Health-Care Joint Venture

Equitable Life Assurance Society of the United States and Hospital Corp. of America reported Tuesday that they have agreed to a joint venture that will provide health-care and employee benefits services.

Financial analysts regarded it as a significant development that reflects the pressures on hospitals to develop prepaid medical-care businesses and become more efficient.

New York-based Equitable, the country’s third-largest life insurance company, and Nashville, Tenn.-based HCA, the largest publicly owned international health-care company, made the announcement in a joint statement.

“It would combine the capabilities, knowledge and expertise of Equitable Group & Health Insurance, a division of Equitable, and HCA Health Plans, a division of HCA, into a new free-standing company,” the announcement said.

Both divisions had combined premiums and premium equivalents exceeding $5 billion last year and serve about 15 million people.

The announcement said the new company will offer a broad choice of health maintenance organizations, preferred provider organizations and indemnity health-care products as well as insurance and financial services products.

“This is a positive step in the right direction,” said Douglas B. Sherlock, an analyst of health-care service companies for Salomon Bros., a New York investment firm. “It is a response to the demands from employers and other payers that health care be delivered in the most efficient way possible.”

Exact financial terms of the arrangement were not disclosed, but analysts said Equitable’s infrastructure and experience in marketing and administration, combined with HCA’s network of 477 owned and managed hospitals worldwide, could make it a formidable force in efficient health-care delivery.

The joint venture would be a quick way for HCA, the nation’s largest hospital management company, to build a national organization to market its hospitals, said T. Michael Smith, director of research for J. C. Bradford & Co. in Nashville.

Todd Richter, an analyst with Morgan Stanley & Co. in New York, said that Equitable could benefit because most insurance companies have been losing business to prepaid group health plans.