Vanderbilt University Medical Center is continuing its retreat from the managed-care business.
Last week, officials of Vanderbilt Health Plans, a for-profit subsidiary of the not-for-profit medical center in Nashville, signed a letter of intent to transfer enrollees in their commercial HMO, Health 1-2-3, to UnitedHealthcare of Tennessee at year's end.
Vanderbilt Health Plans also operates a Medicare HMO, Health 1-2-3 Platinum, a 14,000-enrollee plan it is closing at the end of the year, as well as a Medicaid HMO that serves patients under Tennessee's TennCare plan, which Vanderbilt Health is trying to sell.
Joel Lee, Vanderbilt University Medical Center's executive director of communications, would not say what UnitedHealthcare is paying Vanderbilt for the enrollees who convert to its managed-care product.
"UnitedHealthcare will pay us for each one successfully converted," Lee said. The commercial plan has about 36,000 enrollees in Nashville and surrounding counties.
UnitedHealthcare, based in Minneapolis, is a managed-care company that already provides health coverage to 300,000 people in Tennessee through UnitedHealthcare of Tennessee, its Nashville-based subsidiary.
Philip Hertik, president and chief executive officer of Vanderbilt Health Plans, didn't return telephone calls by deadline. He and Michael Bailey, chief operating officer for the plans, considered spinning off their own company to buy the Health 1-2-3 commercial HMO but backed away from the deal (July 17, p. 2).
"As the UnitedHealthcare deal unfolded, I think they decided they wouldn't have the wherewithal to compete with the UnitedHealthcare offer," Lee said.
Hertik and Bailey are still expected to form their own company to buy Vanderbilt's Medicaid health plan, which serves 12,442 Medicaid recipients under TennCare, Lee said.
Vanderbilt earlier this summer announced it would terminate its Medicare HMO at the end of the year. In total, the three managed-care products lost $15 million on premium revenue of $155 million during 1999, according to state figures. Lee said the bulk of the losses came from the Medicare plan; the other two plans just about broke even.