Priority Health Lands JCIs Business, Medical Center

June 13, 2002
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HOLLAND — A Grand Rapids-based HMO stands to significantly add to its local market share, as well as gain valuable knowledge about delivering health care, with the addition of the Holland area's largest employer to its membership.

Johnson Controls Inc. has signed Priority Health to serve as administrator for its self-funded health coverage for the automotive supplier's 5,300 employees in Holland. Priority Health will develop and offer three health plans, including a non-managed care option, from which JCI's eligible employees can choose, with coverage beginning Jan. 1.

Priority Health also will assume responsibility for running JCI's family medical center in Holland, a unique benefit for employees and their families begun under Prince Corp., which JCI acquired in 1996. Priority Health will subcontract operations of the medical center to Michigan Medical PC, a Grand Rapids-based physician group that now operates the center under JCI's present health-plan administrator, REAL Health.

The door for Priority Health to land the JCI business opened earlier this year when the company, as it does every three years with its vendors and suppliers, put the contract up for bid, said Greg Bolt, JCI's director of human resources in Holland.

While JCI was "not dissatisfied" with REAL Health, Priority Health and its bid offered "distinct advantages," Bolt said. One of the advantages is Priority Health's size and broad network of care providers, he said.

"We went through our normal process and said 'Who's going to be able to provide great service?'" Bolt said. "When you look at their proposals and what they came in with … we said 'This is who we're going with.' We felt they would be the best provider for us."

Priority Health has more than 300,000 members in 27 counties in western Michigan, with a provider network of 2,200 physicians and 27 hospitals.

REAL Health, an employer-owned coalition that buys health-care services on behalf of its members, has about 33,000 members in 13 counties, with a network of 1,500 providers and 20 hospitals.

While securing a business relationship with JCI provides Priority Health an opportunity to grow its share of the market, administering the company's employee medical center can provide even further dividends down the road. By overseeing operations of the medical center, Priority Health hopes to learn more about health-care delivery that it can potentially use in working with other clients and care providers, Chief Executive Officer Kim Horn said.

"This is something that is unique and a new venture for us," Horn said. "We're going to learn something that we can apply elsewhere."

The JCI deal enables Priority Health to bring a "new level of service" to a customer, said Steve Heacock, the non-profit HMO's vice president and general counsel. Running the medical center provides Priority Health a chance to work more collaboratively with a business on health-care cost and affordability issues from an employer's perspective, as well as how a healthy work force translates into improved worker productivity and lower costs.

"It's giving us a chance to look at the world more through their eyes," Heacock said.

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