Queen's Health Systems has taken over a failed Hawaii insurer, rescuing thousands of enrollees whose claims would not have been paid and at the same time adding a PPO to its stable of healthcare offerings.
The move solidifies Honolulu-based Queen's position as Hawaii's most diversified health system, according to Honolulu healthcare consultant Doug Murata.
Queen's took over the enrollees and the license of Pacific Group Medical Association, which was seized by the state after it failed to pay millions of dollars in medical claims.
PGMA now has about 12,000 enrollees. As many as 14,000 others left the plan when its financial difficulties surfaced, but they may return, said Ivan Lui-Kwan, Queen's executive vice president and chief operating officer.
That would mean Queen's would add about 26,000 enrollees to the 160,000 it serves in other health plans, he said.
"From a competitive strategy, it's a very beneficial move for Queen's," Murata said. "Queen's has an HMO and a third-party administrator . . . and now has a fully functioning PPO. With all these products it can easily develop a point-of-service product. They have a very strategic marketing vehicle they never had before."
PGMA also was well-positioned in the small-group market, which Queen's had "never been able to get into," Murata said.
With its broad diversification, Queen's can now market itself to employers as a "total replacement" for another insurer, he said. Before, Queen's could only sell itself as another plan that could be added to an employer's offerings, he said.
"Whether they will be able to execute that is another question," he said.
Queen's operates two hospitals, on Oahu and Molokai, along with physician networks and ambulatory centers.
Queen's will pay the state insurance department $100 per enrollee to take over PGMA, which will amount to about $1 million. Queen's also agreed to pay $50 per enrollee for those who return to the plan, which could amount to another $600,000. Queen's will be responsible for paying all enrollee claims from March 7 onward and will collect all premiums as well.