The acquisition of Bermuda’s two largest medical practices last year cost domestic health insurer Argus $24 million.

Representing over 40 per cent of primary care in Bermuda, Island Health Services and the Family Practice Group and their approximately 15 doctors were swept into Argus Group Holdings Ltd. 13 months ago.

Some $17 million was paid upfront by the end of June last year. The remaining balance, to be paid over four years, was valued at $7.1 million when the deal closed at the end of March this year.

There were acquisition related costs of some $300,000, mainly to do with legal fees and due diligence costs.

The numbers are contained in the company’s just released annual report.

The purchase consideration is subject to certain adjustments dependent on the future profitability of the business.

The contingent consideration is based on the achievement of performance-related milestones and the range of undiscounted payment outcomes is between zero and $8.5 million.

But from the date of acquisition to this March, the newly-acquired companies generated a net profit of $3.4 million on revenues of $11.9 million.

New Argus chairman David Brown said the purchase was one of the company’s boldest and most notable moves.

The purchase was a part of a much larger plan, and follows the Argus acquisition in May 2019 of One Team Health, a leading provider of managed care services for health insurers and their members, based in Markham, Ontario, Canada.

Argus said that it established the template for an integrated model that’s tailored to the needs of an island community and sets the stage for expansion to other jurisdictions.

The company said adding the three businesses to the Argus Group will change how healthcare in Bermuda is not only funded, but delivered.

Mr Brown called it a groundbreaking development and said the benefits of the dramatic move represent the beginning of the company’s integrated healthcare evolution.

Argus began implementing a new operating model about a year ago, including the establishment of two regional hubs – Argus Americas and Argus Europe.

The insurer wants to become more nimble and proactive in executing regional growth strategies.

Argus Americas Chief Executive Peter Lozier said the company reacted to the pandemic, delivering valuable new products and services to better suit the needs of a Covid-impacted market while simultaneously pivoting the administration to a remote delivery model.

And it led to net new sales achievements in all lines while effectively lowering expenses in almost all areas.

Mr. Lozier said the company will maintain the value in the existing Bermuda core business while leveraging the investments in healthcare to establish a foundation that’s ready for significant development.

He said, “For too long, a fragmented, unsustainable system has enabled costs to spiral out of control with decreasing benefit to patients. We know there are better ways to provide quality, affordable care.

“Integrated healthcare isn’t a new concept. Over the past three or four decades, many countries have adopted the model in one form or another, recognising that healthcare that offers a coordinated continuum focused on positive outcomes elevates a community’s wellbeing far better than one in which care and treatment are provided in silos.”