Archive for Wednesday, December 26, 2001

Blue Cross sale gains opponent

LMH chief joins critics of proposed state insurance company merger

December 26, 2001


Add Lawrence Memorial Hospital Chief Executive Officer Gene Meyer's name to the list of those opposed to the proposed sale of Blue Cross and Blue Shield of Kansas to the Indiana-based Anthem Blue Cross and Blue Shield.

"I do not believe it's in the best interests of Kansas patients," Meyer said Monday.

The proposed sale, he said, amounts to fixing something that isn't broken.

"Blue Cross and Blue Shield of Kansas is a well-run organization, one that has had and still enjoys a long-standing relationship with Lawrence Memorial Hospital," he said. "Its efficiency in claims-processing efficiency, payment procedures and its relationships with providers are unparalleled in our relationships with other similar insurance companies.

"We question whether this level of service and satisfaction can and will continue."

Blue Cross and Blue Shield of Kansas officials defend the proposed sale. They noted the company has suffered underwriting losses instances where premiums fall short of claims and administrative costs in nine of the past 10 years. The insurer, Blue Cross officials say, needs to align itself with a larger company.

"We know that we are a strong company and that our plan, today, is in excellent shape," said Graham Bailey, director of communications and public relations at Blue Cross and Blue Shield of Kansas.

"But in the future, we know that to maintain that excellence, we're going to have to change and get bigger we'll be at a competitive disadvantage if we don't," he said. "And to do that, we'd rather make a move now, when we're in a position of strength, rather than wait until we're in a crunch situation."

Anthem Blue Cross and Blue Shield has eight million policyholders in eight states, making it the nation's fifth-largest publicly traded health insurer.

Currently, Blue Cross and Blue Shield of Kansas covers about 700,000 people. It's the state's largest health insurer.

Meyer and other hospital administrators fear the consequences of Blue Cross and Blue Shield of Kansas going from a company beholden to its policyholders to one that answers to profit-seeking shareholders.

"We are suspicious of larger organizations taking over smaller, well-run organizations," Meyer said.

Part of the hospital's wariness, Meyer said, stems from staff members' memories of for-profit Columbia HealthCare's unsuccessful attempt to buy the hospital in 1996-97.

At the time, Columbia HealthCare owned more than 300 hospitals in 32 states. Company officials later were charged with defrauding Medicare and other federally funded health insurance programs.

Earlier this month, Maynard Oliverius, chief executive at Stormont-Vail HealthCare, Topeka's largest hospital, also spoke against the Blue Cross sale, saying it risks more than likely would be gained.

Public interest

The proposed sale was the subject of four public hearings one each in Hays, Wichita, Pittsburg and Topeka conducted by the Kansas Department of Insurance. The hearings attracted more than 1,200 people.

State Insurance Commissioner Kathleen Sebelius will conduct formal hearings on the sale Jan. 7-9 in Topeka.

The hearings coincide with Blue Cross and Blue Shield of Kansas policyholders voting on whether to accept the sale. The votes are due Jan. 11; the official count will be announced Jan. 14.

For the sale to proceed, Sebelius and two-thirds of the policyholders must agree that it's in the state's best interests.

If the sale is approved, policyholders would be paid for their stake in the company.

Sebelius' ruling is due within 30 days of her concluding the formal hearings.

Sebelius' office has estimated that the average Medicare supplemental policyholder would be paid about $1,250. Companies with large group plans those insuring more than 50 workers would be paid more than $100,000.

Several state associations Kansas Hospital Assn., Kansas Medical Society, Kansas Association for the Medically Underserved and Kansas State Nurses Assn. are expected to testify against the sale.

To protect the objectivity of the hearing process, Sebelius is not commenting on the proposed sale. Instead, she's encouraged policyholders to educate themselves before casting their votes.

"She's in a difficult position," said Sen. Sandy Praeger, R-Lawrence. "If she approves the sale and Anthem proves to be unpopular, some will blame her.

"But if she doesn't approve, she could be taken to court, and there's a down side to that, too."

Praeger, who has said she's interested in running for insurance commissioner next year, said she expects the sale to be approved.

"It's rare that something like this doesn't get approved," she said.

"The good news in all this is that people are very satisfied with Blue Cross," she said. "If Anthem makes them uncomfortable, they'll open the door for other companies to compete.

"The reason Blue Cross dominates the market now is because they do such a good job. That's something Anthem will want to hold on to."

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