Since summer, employers have been complaining that their workers’ comp premiums are not falling fast enough under the system’s reform. But by at least one measure the market has improved: the establishment of a new carrier.
CompWest Insurance, only the second new workers’ comp company to be capitalized in the state in the past several years, began underwriting insurance this month following licensing by state regulators.
Headquartered in San Francisco with offices in Newport Beach, CompWest is targeting small to midsize companies with which brokers can work closely to reduce the risk of claims. (It will not write construction or farming policies.)
“We can get our arms around the risk of these companies and establish appropriate medical networks,” said Chief Executive Bill Mudge. “We have been open just three weeks and already have written $1.6 million in policies.”
The company has a $50 million capitalization, with the lead investor a private equity fund managed by MMC Capital Inc., which has sponsored more than 15 insurance companies, including XL Capital Ltd.
The deal was put together by KGI Capital Partners, a division of Kibel Green Inc., a financial advisory firm in Santa Monica.
The firm liked what it saw in the reform plan passed by the state Legislature last year and decided there was an opportunity for a new insurer not saddled by old claims.
“We put together a targeted and good business plan, and we ended up trying to identify a small group of investors who had the knowledge and understanding of a true contrarian opportunity,” said Joel Freedman, KGI’s director of corporate finance.
The other new carrier, Employers Direct Insurance Co., based in Glendale, was formed last year and also was initially capitalized with $50 million. Employers Direct is selling its product directly to businesses, unlike CompWest, which is employing a small broker network.
New Hospital
Saint John’s Health Center has finally finished construction of its new, 150-room in-patient facility, which is scheduled to open Nov. 10.
The board of the Santa Monica hospital decided to build the $90 million facility after the existing inpatient tower, a classic Art Deco design, was heavily damaged in the 1994 earthquake, forcing the hospital to close for nine months.
The new building is constructed on so-called base isolators that should allow the hospital to remain functioning even after a 6.8 magnitude earthquake. The hospital features private rooms with 42-inch plasma TVs, video-on-demand and Internet access. There also are kitchens on each floor where families can cook meals, and apartments where families of critically ill patients can stay nearby.
The opening of the tower is the initial step in reconstructing the campus. The original main wing of the hospital will be torn down in January to be replaced with a 275,000-square-foot building housing diagnostic and treatment facilities, including the John Wayne Cancer Institute.
The hospital is expecting that the project, including the demolition of other buildings and construction of a new entranceway, to cost $394 million. Additional facilities, such as construction of an assisted-living facility and medical office buildings, are set for a second phase that is still in planning stage and not yet priced.
Acquisition Minded
Molina Healthcare Inc., the Long Beach-based managed care insurer that has been in expansion mode for several years, closed a deal this month that added 73,000 new Medicaid members to its rolls.
The company bought the accounts from the financially troubled Wellness Plan of Michigan, which was taken over by the state of Michigan last year. Molina entered the state a few years ago and now operates in five states.
The acquisition marks the third expansion for the company this year. In July it purchased Cimarron Health Plan, entering New Mexico’s market for the first time. And in June it acquired Premera Blue Cross in Washington, where it was already operating.
Molina’s nationwide membership stands at 791,000 members. The company went public last year and its NYSE-listed stock was trading above $36 a share last week, up from a close of $29.85 on Aug. 12.
Here and There
Proposition 67, the Emergency Medical Care Initiative, got a show a support last week from the county Board of Supervisors, which voted 3-2 in favor of the initiative. The measure would place a surcharge on in-state telephone calls to fund emergency services. The county estimates the initiative will generate $140 million annually for hospitals, doctors and other providers
Certified nursing assistants, pharmacists and other technicians at Midway Hospital Medical Center have voted to join the Service Employees International Union. Tenet Healthcare Corp. is selling the Fairfax District hospital to a group of hospital doctors Dr. Daniel Higgins, an outspoken physician at St. Francis Medical Center in Lynwood, has been elected president of the Los Angeles County Medical Association for 2004-2005.
Staff reporter Laurence Darmiento can be reached at (323) 549-5225, ext. 237, or at
[email protected]
.
