Humana Broadens State Market

October 3, 2003
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GRAND RAPIDS — A recent participating agreement signed with PPOM provides Humana Inc. a larger basis from which to market its preferred-provider organization product and further expands the health insurer’s growing presence in Michigan.

The agreement adds PPOM’s network of 129 hospitals and 18,000 physicians and other care providers to Humana’s ChoiceCare Network, a self-funded PPO product with 1.3 million subscribers in 50 states. It strengthens Humana’s ability to offer self-funded groups a strong national care network under ChoiceCare, which has participating agreements with 2,800 hospitals and more than 320,000 physicians and ancillary care service nationwide.

One of the largest preferred-provider care networks in the Midwest, PPOM has 300 hospitals and 40,000 physicians in Michigan, Ohio, Illinois, Indiana, Wisconsin and Kentucky.

By Partnering with PPOM, Humana enhances its capacity to serve large, corporate clients with employees in multiple locations across the country, said John Crusse, Humana’s vice president of sales in Michigan. Multi-location clients are the fastest-growing market segment for Humana, Crusse said.

“This agreement sets Humana apart from its competitors in Michigan,” he said.

The Louisville, Ky-based Humana is one of the largest health insurers in the United States. Humana’s various health plans cover 6.6 million members in 18 states.

Prior to the participating agreement with PPOM, employers in Michigan subscribing to ChoiceCare Network or any other Humana PPO health plan did not have nationwide reciprocity. The new agreement bridges that gap and builds on previous arrangements between Humana and PPOM.

The deal also brings Humana further into the marketplace in Michigan, where it has 40,000 small group policyholders. That base provides Humana a strong foundation to begin building its medium- and large-group business in Michigan, generating increased competition among insurers and managed care providers.

Humana’s interest in growing its share of the market in the state is illustrated with the recent hiring of a president for Michigan, Denise Christy. It’s the first time that Humana has had an executive position solely dedicated to the Michigan market.

“The opportunities are such right now in Michigan that they said, ‘Let’s make it a full-blown market,’” Christy said.

Driving Humana’s interest in Michigan is a change in corporate strategy three years ago that led to the development of new, highly flexible health plans that employers have been increasingly demanding in the wake of escalating health premiums. The participating agreement with PPOM is a “signature event” for Humana that completes the last “critical piece” needed to mount a major push into the state, Christy said.

Humana now has 2,000 large-group policyholders and about 6,000 middle-group subscribers, defined as employers with 51 to 300 employees, in Michigan. The company hopes to triple both of those market shares within 18 months, Christy said.

“It’s a clear opportunity,” she said. “We’ve got the people, we’ve got the products and now we’ve got the network.”

Humana earlier this year debuted a new major medical health plan in Michigan, HumanaOne, that’s specifically for individuals, the self-employed and sole proprietors. The company plans to roll out additional consumer-driven health plans, known as SmartSuite, during the first quarter of 2004 that are designed to enable employers to better tailor their employee health benefits, control costs and mitigate annual premium increases.

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