UPDATE 2-Aetna buys data-network firm Medicity for $500 mln

* Medicity provides technology to exchange health data

* Deal expected to close in January

* Aetna shares rise 0.6 percent
(Adds details on Medicity, background, shares)

NEW YORK, Dec 7 (BestGrowthStock) – Aetna Inc (AET.N: ) said it would
pay about $500 million for privately held Medicity, which
provides technology to exchange health information, in the
latest sign that U.S. health insurers want to diversify.

Medicity provides a network that allows health systems,
hospitals and physician practices to securely get access to and
exchange healthcare information.

It may benefit when an estimated $30 billion in incentives,
created under last year’s stimulus package, take effect in 2011
to encourage providers to move to electronic health records.

Aetna, which projected that the deal would be neutral to
its 2011 results, expects to pay cash for the company. It
expects the deal to close in January, it said on Tuesday.

Aetna CEO Mark Bertolini told the Reuters Health Summit
last month that the No. 3 U.S. health insurer would pursue
opportunities in health IT to diversify. [ID:nN10203835]

Medicity’s health information exchange technology reaches
more than 760 hospitals and 125,000 physician users.

Medicity, based in Salt Lake City, Utah, will operate as a
separate business within Aetna under its existing leadership.

Many health insurers are pursuing areas outside health
coverage in the United States after the passage earlier this
year of healthcare overhaul legislation that could exert
pressure on profit margins and shake up the market.

Aetna and UnitedHealth Group Inc (UNH.N: ) are among those
investing in information technology as they see a business
opportunity in eliminating waste in the healthcare system.

Aetna shares rose 0.6 percent to $30.47 in afternoon
trading on the New York Stock Exchange.
(Reporting by Lewis Krauskopf. Editing by John Wallace and
Robert MacMillan)

UPDATE 2-Aetna buys data-network firm Medicity for $500 mln