Approximately 20 Arizona hospitals have organized to form Premier Healthcare, a hospital-owned HMO that will rival local insurers in Arizona's highly competitive managed-care market.
"It's the first provider-based HMO in the state," said Kaylor Shemberger, president and chief executive officer of Chandler (Ariz.) Regional Medical Center, one of Premier Healthcare's hospital investors. The two major groups behind the HMO are the Voluntary Hospital Federation, a group of nine rural hospitals, and the Arizona Healthcare Alliance, which comprises six Phoenix-based hospitals.
The idea to create an HMO, Mr. Shemberger said, goes back to 1986 when the federation considered forming one to help control rising hospital costs. However, physicians weren't interested in joining the organization at that time.
Today, however, is a different story. Premier's primary function will be to provide hospitals-rural facilities in particular-with greater leverage in annual negotiations over managed-care contracts, Mr. Shemberger said.
Premier filed for its HMO license with the state in September and is expected to be a fully licensed organization by the beginning of 1995. In the meantime, the HMO is searching for a CEO.
Start-up costs are $2 million, with each hospital investor owning an equal share of the company. The HMO's organizers have a conservative goal of enrolling 20,000 people in 1995.