Four Indiana health systems have consolidated their health plans -- two of them money-losers -- amid increasing managed-care competition.
Their new company, Indianapolis-based HealthCare Group, assumed operation of one of the state's largest HMOs, 175,000-enrollee M-Plan, based in Indianapolis and owned by Clarian Health Partners. Clarian owns about 85% of the new company, which has 525,000 HMO and PPO enrollees.
HealthCare Group aims to be the first health system to market both HMO and PPO products statewide. It also plans to consolidate back-office functions, said President and Chief Executive Officer Alex Slabosky, formerly CEO of M-Plan.
National HMOs Aetna, Cigna HealthCare, MaxiCare Health Plans and Prudential HealthCare have been increasing their presence in the Indiana market, Slabosky said. Indiana's penetration rate for HMOs is 19%, according to Chicago-based SMG Marketing Group.
On the PPO front, Indianapolis-based Anthem Blue Cross and Blue Shield and Carmel, Ind.-based Sagamore Health Network, a provider-owned plan, offer statewide products, he said. Sagamore recently launched an HMO.
"We believed it was important to have a strong, viable locally owned managed-care organization," Slabosky said. "If you're going to be a viable competitor against some of these large national companies, you have to have some size."
Besides M-Plan, HealthCare Group includes 10,000-enrollee HMO HealthPoint, with six hospital owners statewide; 90,000-enrollee PPO Signature Care, owned by Parkview Health System in Fort Wayne; and 250,000-enrollee PPO VHA Tri-State Health Plans, with 18 hospital owners.
Through November 1998, M-Plan had net income of about $1.2 million on total revenues of $248.9 million. VHA Tri-State posted net income of $161,000 on total revenues of $1.5 million for the first 10 months of 1998.
Through October 1998, Signature Care lost $300,000 on revenues of $1.1 million, a loss subsidized by Parkview. Two-year-old HealthPoint had an expected net loss, of about $1.2 million on revenues of $14.1 million, this year.
Hospital owners besides Clarian and Parkview include Indianapolis-based Community Hospitals and Evansville's Deaconess Hospital. Other stakeholders, all based in Indianapolis, are HealthPoint; Methodist Medical Group, a 150-physician primary-care practice affiliated with Clarian; and VHA Tri-State.
It will take up to 12 months to consolidate operations, Slabosky said. Legal documents were signed in December.