Foundation Health Systems last week disconnected a grand plan to build a telephone-based medical triage center into a valued service that would differentiate FHS from competitors while managing costs.
The Woodland Hills, Calif.-based managed-care company sold certain assets of its Healthline call center to the Access Health Group of HBO & Co. for $38 million in cash.
Under a 10-year agreement, Access Health will provide call center services to the 4 million enrollees in FHS health plans for an undisclosed monthly member fee.
Access Health already has had FHS as a client since 1995, through FHS' contract with the Civilian Health and Medical Program of the Uniformed Services, which has 2 million enrollees.
The agreement calls for FHS to pay back the $38 million to Access Health over the contract term, said Beth Dalton, a spokeswoman for Atlanta-based HBO & Co. Combined with the per-enrollee fees, the contract is expected to yield $15 million to $20 million a year for Access Health, Dalton said.
That's about how much the internally operated Healthline cost FHS per year; that sum does not include millions of dollars more for research and development of sophisticated computer programs.
FHS executives gave those cost estimates while singing the praises of a medical triage decision-support system that enabled nurses to take calls from enrollees, judge the seriousness of complaints and talk through with the patients what to do about their particular problems (Aug. 25, 1997, p. 72).
The idea, they said, was to satisfy enrollees and manage expenses by increasing access to medical advice while staving off unnecessary visits to the emergency room. Patients with serious problems could be promptly directed to specialists, theoretically saving money by attending to a problem before it got worse and cost more.
But FHS went through a management change last year and decided to concentrate on core health-plan operations in Arizona, California, Florida and the Northeast. The retrenchment came in the face of operating losses that totaled $83 million in the first nine months of 1998 on revenues of $6.6 billion.
The management change left the triage initiative without its executive-level champion, former Chief Executive Officer Malik Hasan, who was succeeded in August 1998 by Jay Gellert. Gellert has focused on short-term, bottom-line priorities.