CMG to provide mental health care for Humana

March 11, 1994|By Patricia Meisol | Patricia Meisol,Sun Staff Writer

CMG Health Inc., a mental health and substance abuse provider to more than 1.4 million people nationwide, said yesterday that it has signed an agreement to serve members of Humana Inc. that would double its size in two years.

The Owings Mills company, started in 1986, provides 24-hour mental health care through its own networks of doctors and facilities in 33 states. It had sales of more than $29 million in 1993. The alliance with Kentucky-based Humana, which owns health maintenance organizations, calls for CMG to manage mental health for its HMO members in selected locations.

Humana also will become a 30 percent owner of CMG under the agreement, providing an undisclosed amount of cash for the company's expansion. Control of the company will remain with its present owners, said Alan J. Shusterman, CMG president and chief executive. He is part owner with his wife, Lisa Shusterman, a psychologist; Douglass Kay, a psychiatrist; Ronald Cann, a psychiatrist, and Complete Health Services, an HMO system based in Birmingham, Ala.

Managed mental health care is still in its infancy. A recent analysis by Alex. Brown & Sons Inc. pegged the potential market at $70 billion. The industry is rife with mergers and acquisitions, but Mr. Shusterman said CMG has resisted many outside investors and venture capitalists in favor of strategic alliances with providers such as Humana.

CMG serves 23 other clients, primarily HMOs, and is develop

ing a program to manage Medicaid patients. It already has a large mental health managed care Medicaid contract in Baltimore through Prudential, Mr. Shusterman said.

With Humana, CMG's first task will be to manage care for members of Humana's newly acquired HMO, Group Health Association, which serves Washington, D.C., and Maryland suburbs.

CMG employs 240 people and has locations in Buffalo, N.Y., Des Moines, Iowa, Indianapolis, Kansas City, Los Angeles and Richmond, Va. It projects a 50 percent increase in employees in the next two years to handle the Humana contract exclusively.

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