Document text
PacifiCare to leave county HMO says market's too small for high profitability By SUSAN JAY Jackson County residents who have PacifiCare for their health insurance will have to find another health maintenance organization. PacifiCare of Oregon, a for-profit HMO, sent letters to employers Monday notifying them that it will not renew its HMO contract with doctors and hospitals in Jackson County after Jan. 31, 2000. Employers will have to contact their insurance agents and search for another health plan. The largest group affected by the decision includes 777 employees working for federal government agencies and more than 200 employees at the Rogue Valley Manor. After that, most of the groups affected are small businesses with 10 to 50 employees. The HMO, headquartered in Lake Oswego, has 5,000 members in Jackson County, compared with 150,000 in the Eugene, Corvallis, Salem and Portland areas. It also has 25,000 members in southwest Washington. "After several years of seeking growth in Jackson County, we have finally determined that our plan membership has not reached levels that are adequate for us to survive in this marketplace," said Deborah Origer, PacifiCare of Oregon's president and CEO. The HMO has been negotiating for some months with representatives from Asante Health System and the independent physician association PrimeCare on a contract, but the HMO determined that the membership was not substantial enough to efficiently spread the insurance risk among the population. "Our disciplined approach to contracting requires success among all the parties -- the health plan, the providers as well as the employers and their employees, and we just couldn't achieve that in Medford," Origer said. The approach Origer is referring to is PacifiCare's "capitation" model for reimbursing health-care providers. The HMO pays a lump sum to the providers, doctors or hospitals to take care of its members. The model places most of the risk and responsibility for managing the health plan's dollars on the health-care providers. "They didn't want to take that risk because of the small number of members," Chris Palmedo, PacifiCare public relations manager, said of Asante and PrimeCare. In 1998, PacifiCare collected $7 million in premiums in Jackson County. Palmedo said the company's net profit after taxes and operations was 1 percent: $70,000. "PacifiCare has achieved great success in higher-population areas in Oregon, and Jackson County may not have been a large enough market for their contracting model," said Mike Bond, CEO of PrimeCare. "They came up with some creative ideas to make it work here, but the membership just wasn't there." This is the third time in two years that PacifiCare has notified communities in Southern Oregon that it was discontinuing HMO coverage. Just last month, PacifiCare announced it would no longer offer Secure Horizon, its Medicare HMO plan, in Jackson County starting Jan. 1, 2000. That move affected approximately 1,450 local seniors. Company officials said that was because the federal government's Medicare reimbursement to HMOs was insufficient. In October 1997, PacifiCare announced it was pulling its regular HMO coverage and Secure Horizons out of Josephine County. Employees covered by PacifiCare will receive notification this week. Mail Tribune Copyright � The Mail Tribune 1999, Medford, Oregon USA