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Aetna Will Buy Health-Data Network for $500 Million

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Dec. 7 (Bloomberg) -- Aetna Inc., the third-largest U.S. medical insurer, agreed to buy closely held Medicity Inc. for about $500 million to expand its health-information services.

The acquisition should have no effect on 2011 financial results and will be funded with “available resources,” Hartford, Connecticut-based Aetna said in a statement today. Medicity, based in Salt Lake City, offers technology that helps 760 hospitals and 125,000 physicians in the U.S. exchange medical data, according to the statement.

Aetna is entering the “new frontier” of information technology to help doctors and clients control costs, Chief Financial Officer Joseph Zubretsky said on Nov. 11 at an investor conference. Today’s deal follows similar moves by UnitedHealth Group Inc., the biggest insurer by sales, as insurance companies diversify to cope with the U.S. health-care overhaul law passed in March, said Jason Gurda, a Leerink Swann & Co. analyst in New York.

“Aetna is looking to provide a broader product offering and be heavily involved in the nuts and bolts of building and modernizing the health-care system,” Gurda said in a telephone interview.

Aetna fell 13 cents to $30.17 in New York Stock Exchange composite trading at 4 p.m. The shares have fallen 4.8 percent this year.

The acquisition is “very strategic,” said Fred Laberge, an Aetna spokesman, in a phone interview “We’re very pleased to be able to enhance our capabilities and accelerate our growth in health-information technology.”

In August, UnitedHealth said it had agreed to acquire Axolotl Corp., a health-data network based in San Jose, California, to continue diversifying beyond medical benefits. Terms of the deal weren’t disclosed.

Axolotl would be combined with Ingenix, the information technology and services company, Minnetonka, Minnesota-based UnitedHealth said at the time. Indianapolis-based WellPoint Inc. is the second-largest U.S. health insurer.

To contact the reporter on this story: Alex Nussbaum in New York anussbaum1@bloomberg.net.

To contact the editor responsible for this story: Reg Gale at Rgale5@bloomberg.net

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