Bloomberg Businessweek

Logo of TRICARE, the health care plan for the ...
Logo of TRICARE, the health care plan for the United States military. (Photo credit: Wikipedia)

News From Bloomberg

By Kathleen Miller and Danielle Ivory

March 21, 2012

TriWest Healthcare Alliance Corp. (1893Q) and its 1,800 employees may learn today whether the company has a chance to survive.

The U.S. military’s health program, called Tricare, stunned company executives last week when it announced a $20.5 billion contract would go to UnitedHealth Group Inc. (UNH), the nation’s largest health insurer by revenue. UnitedHealth will manage care for active-duty military, retirees and their families in 21 states, mostly in the West, starting April 1, 2013.

The work has been TriWest’s lifeline for 16 years, generating more than $20 billion in awards for the closely held company since fiscal 2000, according to data compiled by Bloomberg Government. The probable loss of that revenue stream holds a lesson for businesses dependent on federal contracts as the government cuts back, said Charles Tiefer, a former member of the Commission on Wartime Contracting.

Contractors may feel that they have hit the jackpot when they get a lucrative defense contract, but their feast can turn into a famine,” Tiefer, a professor at the University of Baltimore Law School, said in an interview…Read more.

To contact the reporter on this story: Kathleen Miller in Washington at Kmiller01@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net