Empire Blues draws fireover for-profit venturesConsumer advocacy groups are calling on New York state officials to hold hearings on Empire Blue Cross and Blue Shield's creation of two new for-profit subsidiaries and its possible co nversion to for-profit status.The groups are questioning the propriety of the state insurance department's recent approval of a plan allowing Empire to create the for-profit subsidiaries, seen by some observers as a "back-door" a pproach to a full conversion (March 11, p. 3). They're seeking accountability for tax breaks and public assets received by the not-for-profit plan over the years.When not-for-profit companies convert to for-profit status, they ofte n are required to place assets in a charitable foundation."With this conversion, what happens to that taxpayer money and what happens to the social mission?" asked Ruth Finkelstein, coordinator of New Yorkers for Accessible Health Coverage, a 40-member coalition representing voluntary health organizations.Mark Scherzer, the coalition's counsel, is examining a possible legal challenge of the insurance department's approval of the subsidiaries. Another optio n may be to seek a court order establishing the value of the assets at stake, he said. "Obviously, from the standpoint of the consumer groups, there is great concern that this is a de facto conversion under another guise," he sai d. Consumers Union, an advocacy group that has challenged a number of Blues' conversion plans across the country, contends that "hundreds of millions, perhaps billions, of dollars in charitable assets" could be at stake with Empi re's possible conversion. In a letter to the New York Times last week, leaders of Consumers Union said the New York Assembly "should call emergency oversight hearings and assure that the public assets vested in Empire Blue Cross a re protected and preserved for charitable purposes."Peter Kerr, a spokesman for the 4.8 million-enrollee plan, defended Empire's actions, explaining that Empire's survival and ability to meet its mission in today's competitive mar ketplace requires access to capital. "We are not sitting on top of a whole bunch of money," Kerr said. "At this moment, our surplus is $280 million." At least one group said there is merit in a discourse about "public good and valuation issues." James J. Barba, chairman of a special Empire review panel created by the state Legislature in 1993, said his nine-member advisory group intends to lead some sort of public discussion, perhaps as early as next month.
THE WEEK IN HEALTHCARE;BLUE CROSS/BLUE SHIELD
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