Metavante Corp.'s plan to buy AdminiSource Corp., a Carrollton, Tex., provider of payment services to insurers and health-plan administrators, would push the Milwaukee company further into the developing market for health-care payments.
The deal, announced Tuesday, would be Metavante's second acquisition in health care this year and its third since 2003. The Marshall & Ilsley Corp. unit says it wants to capitalize on the potential growth of health savings accounts, which were authorized by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
The AdminiSource deal "gives us the full circle on funds movement," Frank D'Angelo, the president and chief operating officer of Metavante's payments group, said in an interview Tuesday. "It rounds out our payment solutions."
Metavante said it expects the deal to close this quarter. It did not say how much it would pay.
Mr. D'Angelo said Metavante would continue to seek acquisition targets in health care.
"There are many pieces to the medical payments system. The industry is evolving," he said. "There are probably lots of future opportunities here to electronify transactions. We're trying to make sure we have the right set of solutions."
AdminiSource was founded in 1997. It cuts checks on behalf of its customers to pay health-care providers, produces statements and explanation-of-benefits reports, and provides claims reconciliation and adjudication services. It processes 300,000 to 400,000 transactions a day and has customers operating from more than 120 locations in 30 states.
Dennis Magill, AdminiSource's president, chairman, and chief executive officer, would not say how many customers it serves, but he estimated they cover about 3.5 million individuals. The majority of the customers are third-party administrators serving companies' self-funded health plans, but the biggest customers are insurance carriers and health maintenance organizations, he said.
In the past, larger companies have tried to buy the privately owned AdminiSource, Mr. Magill said, but its owners had refused to sell until Metavante approached them about five months ago to discuss its vision for health payments.
"That really matched where we anticipate the industry going," he said.
AdminiSource was studying offering HSAs to its own employees and working with third parties to offer the services related to such accounts commercially, and Metavante's pitch made sense, he said. "That's what brought us to the point of saying this could be a real good next step for us."
Mr. Magill and other employees are expected to stay at AdminiSource after the acquisition. It would continue to operate under the AdminiSource name as a unit of Metavante.
Most of AdminiSource's payments are paper checks, he said, and the company's imaging services are popular with customers.
In July, Metavante acquired Med-i-Bank Inc. of Waltham, Mass., for $145 million and renamed it MBI Benefits Inc. It processes card-based payments for consumers' medical transactions, deducting money from employees' benefit accounts when they have medical expenses such as prescription medicine.
In 2003 Metavante bought Printing for Systems Inc., a Madison, Conn., provider of identification cards and other documents for the health insurance industry.
In June, Metavante announced that Siemens Medical Solutions, a unit of the German technology company Siemens AG, would offer its health-care customers Metavante's online billing and payment services.
Other payments vendors are also pushing into the health-care market. Fiserv Inc. of Brookfield, Wis., announced plans in June to offer HSA processing and management services to small and midsize banks, which Metavante also serves.
Breffni McGuire, a senior analyst in the global payments practice at TowerGroup, a Needham, Mass., market research unit of MasterCard International, said Metavante, like other payments "megavendors," is looking for ways to move into new markets.
"Metavante has really focused on the health-care market as one of those places," she said. "They are looking at it not only from an acquisitions point of view, but also an alliance point of view."
