Private Healthcare Systems, the nation's eighth-largest PPO, has reorganized in a move the company says will meet shareholder and customer needs for diversified products.
It appears the Waltham, Mass.-based PPO is restructuring for survival.
"As it's currently configured, PHCS is not going to make it" in markets that are demanding increased risk-sharing arrangements, said Peter Boland, an analyst based in Berkeley, Calif.
The $100 million company, with national provider networks, still has no capitated arrangements, although a spokeswoman said some are in development.
PHCS offers discounted provider networks, utilization management and other programs to employers through a group of insurance carriers that are its shareholders and also use its services. It also contracts directly with large, self-insured organizations.
PHCS "is not viewed as a one-stop shopping service for employers and insurers," Boland said. Its insurer shareholders are pouring money into developing their own at-risk arrangements, he said.
In the reorganization, PHCS has set up five strategic business units focused on developing new managed-care products and providing data services.
"We've put millions of dollars of investment into*.*.*.*one of the largest healthcare databases in the country," said Gene Guselli, PHCS president and chief executive officer. The reorganization "focuses our attention on capitalizing on that tremendous asset."
PHCS' insurer shareholders "are looking for tools they need to develop whatever type model of managed care they may need to fit their strategic direction," Guselli said.
Information services are the "core" of new managed-care products, he said. Information "could be anything from provider-profiling capabilities to organizing specialists within networks," he said.
Agreeing that focused information may be the single most important asset for a healthcare company, Boland questioned whether PPO-oriented data is sufficient for building at-risk products.
Guselli declined to comment on reports that key executives, including its corporate medical director, had left, saying only that "new leadership was identified within the organization."
About 4.5 million people have access to PHCS networks.
Privately held PHCS posted its strongest year both financially and in enrollment growth in 1994, Guselli said. Revenues climbed beyond $100 million, he said.