Provider-owned OhioHealth Group, a for-profit managed-care company, is selling its money-losing HMO.
"I think we reached a point where we really wanted to focus on our profitable products," said Annie Klie, a spokeswoman for OhioHealth Group. "Our situation is not unusual."
Ironically, OhioHealth Group's owners are hospitals and physicians. The Worthington, Ohio, company is a 50-50 joint venture between the eight-hospital OhioHealth Corp. and a 4,000-doctor independent physician network, Medical Group of Ohio, both based in nearby Columbus, Ohio. OhioHealth Corp.'s largest hospital is 778-bed Grant/Riverside Methodist Hospitals-Riverside Campus in Columbus.
Klie said OhioHealth Group will keep its nonrisk products, a 16-year-old PPO called HealthReach, which has 170,000 members, and HealthReach Rx, a 110,000-member prescription drug plan.
On the block is OhioHealth Group's 27,000-enrollee HealthPledge HMO. HealthPledge lost $6 million last year, Klie said, though she declined to reveal further financial information. Alan Baumgarten, a Minneapolis-based healthcare information and research consultant who tracks HMOs in eight states, said HealthPledge has lost $15 million since its inception in 1995.
"I think HealthPledge has been seeing much the same results in Ohio as other health plans have nationally: strong upward pressure on medical costs and pharmaceuticals," Baumgarten said. "But in the last year or two, hospitals and physicians have been seeking and getting better deals and using their leverage to negotiate higher payments from health plans." (See special report, p. 52.)
Klie said HealthPledge is licensed in 46 counties, but it serves only 15.
"But once we got past the third year, it became apparent that our business plan and bottom line weren't going to work," she said.
OhioHealth Group closed its 7,000-member Medicare HMO, HealthPledge Plus, in 1998. That HMO was a joint venture with the Ohio State University Health System, and it, too, was a break-even proposition at best, earning only $2 on $28 million in premium revenue in 1998. The company has not set a deadline for the sale of HealthPledge but hopes to have a buyer by year-end.
Chuck Cook, senior vice president and chief managed-care officer for OhioHealth Group, said the HealthPledge losses did not severely affect OhioHealth Corp.'s bottom line. The hospital system earned $15.5 million on revenue of $1.2 billion last year.