9 Health IT Tools Patients Should Understand

Professional services firm Towers Watson has signed an agreement to purchase Extend Health, an online health insurance exchange for supplemental Medicare coverage, for $435 million.

The addition of Extend Health's health insurance exchange technology infrastructure, call centers, and existing base of 75 carriers represented in its online marketplace will help Towers Watson--best known for workplace benefits and talent management consulting services--to expand its offering into helping clients provide their retirees with assistance in purchasing private health insurance, including supplemental Medicare health plans.

Extend, which was founded in 2004, is based "largely on Microsoft technology," said Stephen Krupa, a director at Extend Health and managing member of Psilos Group, a health investment firm which owned approximately 40% of Extend Health. Another major Extend Health investor, prior to the Towers Watson sale, was Revolution Health Group.

Microsoft last year introduced a health insurance exchange product for states launching their own health insurance exchanges as part of a mandate under healthcare reform .

That Microsoft HIX offering for states is based on core components from Extend, including those built on Microsoft software such as BizTalk Server 2010 and Microsoft SQL Server.

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In addition, Extend Health's technology offering includes online decision support tools that can help retirees shop for supplemental Medicare plans based on their individual patient needs, including preferred network of doctors, prescribed medications, co-pays, and other factors.

"These decision support tools help a retiree choose a plan with the best value for their particular needs," said Krupa in an interview with InformationWeek Healthcare.

Extend Health brings to Towers Watson an exchange that currently has clients in the public and private sectors, including nearly three dozen Fortune 500 companies and more than 200,000 retirees.

Krupa said the acquisition is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act and is expected to close in about 60 days.

Extend Health in January had also filed a registration statement with the Securities and Exchange Commission for a proposed initial public offering of its common stock. The number of shares to be sold and the price range for the proposed offering had not yet been determined. Since the company is being sold to Towers Watson instead, the IPO will not happen, said an Extend Health spokesman.

Extend Health will operate as a new business segment within Towers Watson, joining three existing segments of benefits, talent and rewards, and risk and financial services. The new Exchange Solutions segment will be led by Bryce Williams, co-founder and CEO of Extend Health, and will begin with more than 300 Extend Health employees.

Towers Watson, based in N.Y., was formed in 2010 by the merger of Towers, Perrin, Forster & Crosby and Watson Worldwide.

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