• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Boise-Based Primary Health Inc., Sans Clinics, Looks Forward to Growth

Posted on: Monday, 9 January 2006, 12:00 CST

By Carlson, Brad

Primary Health Inc., which sold its Treasure Valley medical clinics in mid-2005, expects its remaining business to prosper this year, CEO Elwood Kleaver says.

The Boise-based company provides health insurance to about 11,500 people, owns the majority of Idaho Physicians Network, and recently started marketing a third-party administration service.

In 2005, we were growing in every aspect of our business, including providers, number of groups we have been enrolling, and viability and profitability, Kleaver said.

The company operates from offices in Washington Group Plaza in downtown Boise, and also maintains an office in Idaho Falls.

We are contemplating expansion into other areas in 2006, Kleaver said. The company hasn't identified locations, but plans up to two new offices with five to 10 employees each.

It will give us an opportunity to better support our provider network, and also will give us exposure or opportunity with more brokers and employers in those markets, he said.

Last June, Primary Health sold 13 medical clinics in the Treasure Valley to the health-care professionals that operate them. The clinics continue to do business as Primary Health Medical Group.

The sale enabled the physicians to focus exclusively on providing care, and to bring in Boise-based St. Luke's Regional Medical Center as a minority owner. The deal gave Primary Health Inc. resources to expand its offerings and its provider network - now 3,500 members, up 10 percent in the past year, said Kleaver, who expects more moderate growth in 2006.

Primary Health Inc. - which has about 50 employees, less than half as many as before the selloff - signed a long-term contract with the clinics' new owners.

The sale went very well, Kleaver said. The medical group is happy and we are happy.

Excluding $25 million in clinic revenues, Primary Health Inc. took in about $29 million in 2005, up 10 percent, he said. He expects a 20 percent increase this year.

The most significant factor is that we are coming back from some difficult times, Kleaver said. We have introduced several new products, and have had better execution with our core products.

Kleaver, a longtime business consultant who was based in Milwaukee, came to Primary Health in late 2002. At the time, health- plan enrollment lagged projections following a mid-year premium hike. He evaluated the company's products and prices.

We have been profitable since 2004, we improved our position in 2005, and will improve our position again in 2006, he said.

Premiums increased by an average of 8 percent for 2006, down from last year's 12 percent hike.

Medical inflation is a little lower, and we've been able to pass on our efficiencies, Kleaver said, adding that the company plans to continue upgrading its technology this year.

Employers have tried to reduce effective premium increases by passing more costs to employees and offering less elaborate plan options, he added.

Primary Health insures employers of all sizes, but typically emphasizes plans covering two to 50 people. The company is attracting more mid-sized employers.

Most recently we have been moving more into the 50-to-100 market, Kleaver said. I believe the market is now beginning to respect our operating capacities more so than it had in the past.

Primary Health's insurance products include preferred-provider and point-of-service plans, and - for a small number of corporations that require them - an HMO product.

The company also offers health reimbursement accounts and health savings accounts that exemplify the movement toward consumer-driven health care, Kleaver said.

Both are funded with pre-tax contributions that remain in the account from year to year, and are used in conjunction with a high- deductible health plan. Health savings accounts are owned by the insured person, and accrue interest.

These types of plans represent a significantly high-growth area, and we believe it will be even larger in upcoming years, Kleaver said in December.

Primary Health launched a third-party administrative service in 2005, and we expect that to be a significant contributor in 2006 to revenue, he said.

The company is market-testing additional benefit designs that it will debut as demand warrants, Kleaver said.

Primary Health doesn't offer individual coverage, or new Medicare prescription plans that the federal government authorized late last year.

We felt it was going to be a fairly crowded environment, Kleaver said of the Medicare Part D market. We decided to focus our energies on the commercial market.

Idaho-based competitors include Blue Cross of Idaho and Regence Blue Shield of Idaho.

They set the bar high in providing service, Kleaver said. It requires us to meet that challenge, and we have.

(Copyright 2006 Dolan Media Newswires)

Source: Idaho Business Review, The

More News in this Category