Managed Care Wholesaler Trims Number Of Insurers Involved

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The five remaining insurer-owners of Private Healthcare Systems Inc., Waltham, Mass., a large wholesale managed care company, have bought out the other insurer-owners and invested new capital in the company.

A Private Healthcare spokeswoman declined to say how much the current owners had invested in the company or name the insurers that had dropped out, but the company listed 14 insurer-owners just two years ago.

Private Healthcare executives are happy about new capital and the change in the ownership group, according to Joseph Driscoll, president of Private Healthcare.

“This new corporate structure makes it easier for PHCS to access capital markets and pursue growth opportunities,” Driscoll said in a statement.

Private Healthcare is one of the biggest, quietest managed care companies in the United States.

The privately held company organizes networks of doctors and hospitals, then rents the networks to retail health carriers and large self-insured employee plans.

Private Healthcare network providers handle care for 6.5 million U.S. residents.

Insurers that still own a significant number of Private Healthcare shares include Trustmark Insurance Company, Lake Forest, Ill., parent of CoreSource Inc.; Guardian Life Insurance Company of America, New York; and units of Fortis N.V., Brussels; Pacific Life & Annuity Company, Newport Beach, Calif.; and CIGNA Corp., Philadelphia.

Great-West Life Assurance Company, Denver, led a group of five insurers that organized Private Healthcare in 1985, in an early effort to create a national managed care delivery system.

The list of owners has changed dramatically over the years as a result of mergers, acquisitions, the HMO boom of the mid-1990s, and the managed care consolidation of the late 1990s.

Although the ownership group has shrunk, the Private Healthcare networks have grown: the company now has a provider network in all states but Wyoming and South Dakota. The networks have contracts with 355,000 doctors and 3,400 hospitals.

Jim Herrington, chief marketing officer at Private Healthcare, says the recent ownership group changes and capital investments should be good for health insurance agents and brokers who use Private Healthcare and the retail carriers that rent its networks to set up employee health plans.

“We will be more aggressive in the marketplace,” Herrington says.

Although Private Healthcare sells to individuals and small employer groups only through retail carriers, it is aggressive about reaching out to producers. It holds 15 broker meetings a year all around the country.

Interest is high: for a typical producer meeting, Private Healthcare invites about 400 producers and ends up with more than 125 participants, Herrington estimates.

Many producers want to know about the companys efforts to measure and improve network quality, Herrington says.


Reproduced from National Underwriter Life & Health/Financial Services Edition, October 8, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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