Sierra Health to expand military operations

Monday, April 3, 2000 | 11:44 a.m.

Sierra Health Services Inc. is ending its participation in a medical consortium because the Las Vegas company may compete with the organization for business in the future.

The TriWest Healthcare Alliance is a Phoenix-based management service organization that is contracted with the Department of Defense to provide managed health care through its TRICARE program. Sierra has been affiliated with TriWest since 1997 and the break is effective immediately.

Sierra has owned a 12 percent equity position in TriWest valued at $3.8 million that provides managed care services to about 100,000 active duty and retired military and their dependents in Nevada and Missouri. A spokesman for Sierra said income received as a result of the relationship was minimal.

No jobs will be lost as a result of the move.

As part of the termination agreement, TriWest has agreed to buy Sierra's stake in the consortium for $3.7 million. Sierra has agreed to a noncompete arrangement with TriWest for the alliance's existing regional business and has agreed to provide network services in Nevada and Missouri for at least 90 days.

Since Sierra and TriWest plan to expand their military health service contracts in other regions of the country, Sierra decided to head off a potential conflict of interest on competitive bidding.

"We're planning on becoming a little more aggressive in military contracts in the future," said Peter O'Neill, vice president of public and investor relations for Sierra.

Sierra already has a major military contract covering personnel in 13 northeastern states and Washington, D.C.