Signal Hill Insurer Will Quit Calpers In Coverage Row
Health Care by Laurence Darmiento
It’s not easy walking away from $30 million in annual business, but that’s what Universal Care did last week.
The Signal Hill-based managed care company said it would withdraw from participation in the California Public Employees’ Retirement System next year after getting what it felt was the short end of the stick from the giant pension plan.
Calpers, which faced huge health-care premium hikes for 2003, dropped PacifiCare Health Systems Inc. and Health Net Inc. earlier this year in an effort to lower costs. That apparently left 150,000 members up for grabs for the system’s remaining insurers. But Calpers decided to automatically enroll the members in Blue Shield of California, although they can choose other insurers if they make the effort.
So how does that hurt Universal Care, a small regional insurer with 350,000 enrollees, including 20,000 Calpers members?
Howard Davis, Universal’s founder and chief executive, said he feared that without being given a chance to market the company’s plan to all 150,000 members, the ones signing up would be sicker patients seeking access to UCLA-Medical Center and other top hospitals that have contracts with Universal.
That’s a process called “adverse selection” and it’s feared by managed care companies. “I felt that was a very negative situation for us,” said Davis.
Calpers officials said they made a decision that was in the best interest of its membership, noting Blue Shield, a statewide plan, had a network that allowed nearly 90 percent of the former PacifiCare and Health Net members to keep seeing the same doctor.
First Consulting Group Inc., which gobbled over a half dozen companies as it approaches $300 million in annual revenues, has acquired one more.
The Long Beach-based consulting, technology and outsourcing services company spent $5 million last month to acquire a majority stake in Codigent Solutions Inc., a Nashville, Tenn.-based information technology firm.
Among its services, First Consulting provides IT outsourcing for larger hospitals. What Codigent gives the company is an entr & #233;e to smaller and medium-sized hospitals in need of similar services, said Luther Nussbaum, chairman and chief executive of First Consulting. “Outsourcing is a fast-growing trend within the healthcare marketplace,” he said.
The company plans to fold the privately held Codigent into its existing outsourcing business and run it as a subsidiary under the helm of Tim Unger, who founded Codigent in 1998.
Codigent has seen its revenue grow consistently since going public in 1998, but with the tech bust it lost $24.5 million in 2000 and $11.4 million in 2001. For the first quarter ended March 29, it reported net income of $1 million, up from $896,000 for the like period a year ago.
Staff reporter Laurence Darmiento can be reached at (323) 549-5225 ext. 237, or at