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Vanguard Health Fails to Win New Contract With Arizona Medicaid

Vanguard Health Systems Inc. (VHS), an operator of hospitals and health plans controlled by Blackstone Group LP, failed to win a new contract with Arizona’s Medicaid agency to provide acute patient care.

Vanguard’s Phoenix Health Plan, a Medicaid managed health plan with 186,200 members in Arizona, was notified March 22 that it wasn’t awarded a contract by the Arizona Health Care Cost Containment System, the Nashville, Tennessee-based company said today in a statement. The current contract expires on Sept. 30, and it was seeking a contract beginning Oct. 1.

Phoenix Health made up about 80 percent of the company’s $369.7 million in revenue from its health plans segment in the six months ended Dec. 31, according to the statement and a regulatory filing. The company had $2.9 billion in consolidated revenue during the period.

Phoenix Health Plan members comprise 79 percent of Vanguard’s 236,000 members in five health plans, according to the filing. Membership in the plan was down from an average of 205,000 patients in the six months ended Dec. 31, 2011.

Keith Pitts, vice chairman at Vanguard, declined to comment beyond the statement. No representative of Arizona Medicaid could be reached today outside normal business hours.

The company has until April 1 to file a protest, according to the statement.

To contact the reporter on this story: Sarika Gangar in New York at sgangar@bloomberg.net.

To contact the editor responsible for this story: Sylvia Wier at swier@bloomberg.net.

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