Queen's Health Systems in Honolulu, which owns Hawaii's largest private hospital, may bid aloha to its managed-care business, joining the growing ranks of hospitals that have dumped their money-losing HMOs.
Queen's Health, which has 170,000 HMO enrollees in four health plans, has walked away from talks about acquiring the 51,000-enrollee HealthHawaii health plan operated by rival hospital system Kapiolani Health, officials told MODERN HEALTHCARE. They said Queen's Health hopes to shift priorities and focus on its acute-care operations.
Queen's Health board of directors decided July 28 to abandon the Kapiolani talks and directed Chief Executive Officer Richard Griffith to begin exploring "strategic alternatives" for its health plans, said Jeri Kakuno, a spokeswoman for Queen's Health Management, which operates the system's managed-care plans.
"Right now, we are trying to keep all options open," Kakuno said.
Sources familiar with the situation said Queen's Health may try to sell the plans but hasn't given up on the possibility of finding a joint-venture partner or major investor to help it retain partial control of its health plans.
Kakuno said the process could take several years.
Queen's Health and Kapiolani began talks earlier this year about linking the two systems' health plans. Some had speculated that the talks were a precursor to a broader affiliation.
Queen's Health operates the islands' largest hospital, 530-bed Queen's Medical Center in Honolulu, along with 29-bed Molokai General Hospital in Kaunakakai on Maui and several other outpatient and ancillary facilities. Kapiolani is a two-hospital system specializing in women's and children's care. That broader affiliation now appears to be dead.
Pat Oda, a spokeswoman for Kapiolani, said, "We need to continue to evaluate other opportunities."
HealthHawaii, the Kapiolani health plan, lost $8 million in the fiscal year ended June 30 on revenues of $66 million. It is increasing premium rates, renegotiating provider contracts and "looking for ways to improve the medical management side of the business," Oda said.
Queen's Health flagship HMO, Island Care, lost $3.6 million through the first nine months of 1998 on revenues of $34.5 million, according to the latest data from the Hawaii Department of Insurance. Island Care has about 35,000 enrollees.
The system's other health plans include two PPOs-Queen's Preferred Plan and Queen's Health Care Plan, which also functions as a third-party administrator-and Queen's Hawaii Care, a Medicaid HMO.
Overall, however, Queen's Health is solidly in the black. The 12th-largest corporation in Hawaii, it posted net income of $19.8 million on revenues of $497 million last year.