General Health System in Baton Rouge, La., has become the latest provider to unload an unprofitable HMO.
The two-hospital system expects to find a buyer for its Gulf South Health Plans by early February, President and Chief Executive Officer Milton Siepman said.
The system hired investment bankers Salomon Smith Barney to find a buyer in September, and at least seven organizations have expressed interest, he said.
The plan has about 96,000 Medicare and commercial enrollees.
After 14 years of ownership, General Health's board decided the HMO wasn't worthwhile, Siepman said. Siepman, an employee of Winter Park, Fla.-based Adventist Health System, was brought on board three years ago to run the system under a management contract.
Siepman said the HMO diverted the system's capital and attention from providing care and caused a "schizophrenic" relationship with local doctors, who didn't expect a hospital-owned plan to be tough on their rates and use.
"It's a very difficult animal to manage," Siepman said. "Like many organizations, our board has decided we don't need this."
He said the plan's mounting financial losses in the last fiscal year prompted the decision to sell. Gulf South lost about $10 million on revenue of about $225 million for the year ended Sept. 30, 2000. Overall the system was profitable, posting a $2 million surplus on revenue of about $400 million, Siepman said.
The sale is part of General Health's effort to retreat from noncore operations. It has consolidated home health operations and trimmed its nursing homes.
Siepman said a turnaround effort, which includes new management at the plan, has been under way for about six months. "I believe in a year to 18 months, Gulf South can be run profitably," he said.
Siepman, 64, will retire Jan. 15, when Adventist's management contract expires. He was formerly president and CEO of Adventist's Tennessee Christian Medical Center in Madison, Tenn.
William Holman, formerly a hospital executive with Rochester, N.Y.-based ViaHealth, has been hired as General Health's new chief executive.
General Health owns Baton Rouge (La.) General Medical Center, which has two campuses with 423 staffed beds, and 54-bed Vermilion Hospital for Psychiatric and Addictive Medicine in Lafayette, La.