Health Insurance Plan of Greater New York, one of the oldest managed-care companies in New York City, recently slashed its headquarters staff by 10% under mounting competitive pressure.
The layoffs of 60 managers, which will immediately save the not-for-profit insurer $3 million to $4 million, are part of a broad restructuring. In addition, HIP is reducing some premiums and shifting more financial risk to its doctors.
"What is triggering our actions is nothing more complex than competitive forces," said Steven Lewis, an HIP first senior vice president.
Over the past decade, the company poured $250 million into rebuilding its health centers and opening new ones, including a facility in White Plains. Soon, HIP will launch two important new products: one for small businesses, which lets members see doctors outside HIP's network, and one for Medicare recipients that carries no premium.
In the meantime, HIP's enrollment continues to fall while its rivals are growing sharply. Though it remains the city's largest HMO, HIP's enrollment through July was 885,182-a drop of almost 75,000 over two years. During the past year, HIP's commercial enrollment alone has fallen by 33,000.
While HIP is still the city's largest provider of managed care to Medicaid recipients, its growth in that market is dwarfed by its newer competitors. As of June, HIP had 79,000 Medicaid enrollees, an increase of fewer than 5,000 over June 1994. Some of HIP's competitors have grown by as many enrollees in a single month.
Getting new enrollees for HIP is a critical target for President Anthony L. Watson, who has pushed through many changes in his five years as head of the HMO. An influx of new, younger enrollees helps HIP to even out the medical risk of insuring longtime HIP enrollees, many of whom are now aging.
But HIP's core enrollment is being wooed aggressively by its competitors.
"We're all in a very competitive position, and all of the health insurers are looking very carefully into our overhead and administration costs," said Frank Branchini, chief executive officer of Group Health, another not-for-profit insurer.
Aggravating HIP's problems are two recent events.
Earlier this summer, the state put the brakes on the enrollment of Medi-caid recipients in HMOs.
In July, HIP's Medicaid enrollment swelled by 9,000, its largest-ever increase in a single month. But by August, the state had forbidden all HMOs from directly marketing to Medicaid beneficiaries, a move HIP sees as harmful.
"We're concerned the state action will dampen growth for HIP and everyone else," Lewis said. Now HIP may ask the state for "flexible" treatment. "If we cannot maintain enrollment, we'll look to the government to exempt HIP or look for other actions," he added.
The state Department of Health wouldn't comment, but industry sources say Commissioner Barbara DeBuono has made it clear the state will not exempt any HMOs from its ban on direct marketing.
Financial pressures are also increased by HIP's agreement with the city not to increase premiums through 1998. The company insures 27% to 30% of city employees and their dependents.
HIP must also move to keep its share of city workers. In an open-enrollment period scheduled to begin in January, HIP could gain or lose hundreds of enrollees.
"The competition is fierce out there. HIP holding its own is probably a feat in itself," said Roslyn Yasser, an official at District Council 37, whose members form the bulk of HIP's union enrollment.
One way HIP is trying to reduce staff is to ask its doctors to share more of the financial risk of treating patients, including hospitalization and special services such as magnetic resonance imaging.
Unlike newer managed-care companies, HIP pays doctors salaries and operates health centers throughout the New York area.
`These are new financing arrangements with our medical groups to broaden their degree of risk," Lewis said. Such moves are new for HIP as it tries to keep its premiums lower than rivals.
"Price competition will be the key over the next three to five years," Lewis said.
HIP did not ask the state for any rate increases in 1995. And in January, it will introduce a new Medicare product that eliminates all premiums for seniors.
"The result will be membership growth," predicted Eileen S. Winterable, HIP's treasurer.