One of Hawaii's leading hospital systems effectively is giving away its money-losing managed-care plan.
Honolulu-based Kapiolani Health last week agreed to transfer the 27,000 commercial enrollees in its HealthHawaii HMO to Hawaii Medical Service Association, the state's Blue Cross and Blue Shield plan.
Kapiolani, a two-hospital system specializing in women's and children's care, launched talks with the 600,000-member HMSA almost immediately after earlier discussions about HealthHawaii with Queen's Health System fell apart in mid-summer.
Queen's Health operates Hawaii's largest private hospital, 430-bed Queen's Medical Center in Honolulu. It also runs four health plans with 170,000 enrollees, although it is considering exiting that side of the business (Aug. 16, p. 8).
Kapiolani's agreement with HMSA, Hawaii's dominant health plan, will take effect Nov. 1.
Cliff Cisco, an HMSA senior vice president, said the agreement is not a sale and doesn't include a monetary transaction.
"It's a gradual transfer or transition (of enrollees)," he said.
Officials earlier described the proposed arrangement as a "reaffiliation." The Hawaii Blues and Kapiolani launched HealthHawaii in 1996 through a joint venture. But the Blues plan pulled out of the joint venture a year later (Nov. 3, 1997, p. 36).
Under the agreement with Kapiolani, Honolulu-based HMSA will assume responsibility for HealthHawaii's insurance operations, including underwriting, claims processing, customer service, enrollment and other business functions.
Kapiolani said coverage of HealthHawaii's 18,000 noncommercial enrollees-Medicaid and other subsidized enrollees covered through the state's basic insurance plan-and another 4,800 enrollees in the Hawaii Public Employees Health Fund will not be affected "at this time."
Those contracts are expected to run through June 2002 and June 2001, respectively, according to Kapiolani officials.
HealthHawaii lost a total of $8 million on revenues of $66 million in the fiscal year ended June 30.