UniHealth, the Burbank, Calif.-based integrated delivery system, is considering severing its managed-care arm, MODERN HEALTHCARE has learned.
If it does, the not-for-profit would be the latest integrated system to view the selling of insurance as antithetical to its mission.
UniHealth's management once believed that an integration strategy had to include a health plan, as do recent systems that have formed HMOs. But UniHealth's current leaders may have abandoned that belief, as have several other systems (June 17, 1996, p. 77). It seems the ranks of providers trying to get out of the managed-care business is equaled by the number trying to get in.
Sources close to the deal said last week that UniHealth has asked Dean Witter to evaluate the strategic and financial value of its units, including its HMO, CareAmerica. The sources, who requested anonymity, said the evaluation may be a prelude to a divestiture.
UniHealth executives declined comment last week.
The sources said UniHealth's board called for the evaluation, which also seeks to determine any potential market interest in CareAmerica, in a hotly competitive environment in which large California plans are merging.
PacifiCare Health Systems and FHP International as well as Health Systems International and Foundation Health Corp. are set to close their pending deals.
"CareAmerica is being shopped around," and two or three plans are interested, said one source. UniHealth already has turned away several interested companies because they weren't the "right fit," another source said.
A possible suitor for CareAmerica is HSI, whose strategy has been to acquire provider-sponsored HMOs. Just last year, Health Net, HSI's California HMO, recruited CareAmerica's former president and chief executive officer, Arthur Southam, M.D., to be its president and CEO.
UniHealth includes nine affiliated physician organizations, eight hospitals and a home healthcare company in addition to CareAmerica, which is a life insurance company and workers' compensation carrier as well as an HMO.
In what may be the first move across state lines by a provider-owned HMO, CareAmerica is seeking an HMO license in partnership with Michigan Provider Network, a consortium of 2,500 doctors affiliated with nine medical centers in the Detroit area. The Michigan plan hopes to begin operations next month.
CareAmerica, with more than 263,000 enrollees, recently has experienced robust Medicare enrollment growth and is generally viewed as a desirable acquisition, although the latest available figures reveal that it lost money in 1995 (See chart). The HMO declined to release its 1996 financial results.