A healing strategy.

CareAmerica CEO and President Arthur Southam started out with every expectation of becoming a doctor but he's found a different way to help people

After Arthur Southam earned his medical degree from UCLA and finished his internal medicine internship at Cedars-Sinai Medical Center, he had every expectation of working as a doctor.

After all, both of Southam's parents were physicians, and his wife is an obstetrician. He just wanted to spend a brief time cutting his teeth at a startup health maintenance organization, CareAmerica Health Plans. Southam was recruited as its director of medical affairs, one of its original 10 employees.

"I only expected to be here a year, gaining knowledge on such issues as quality improvement activities, provider and physician compensation, and strategy," says Southam, who manages simultaneously to be young and distinguished. During a recent interview, he spoke in a voice that brims with casual self-confidence. His 20th floor office, tastefully decorated in low-key woods and pastels, commands a view of much of the San Fernando Valley.

Southam gained the office through a change of plans: mainly, he never left CareAmerica. Eleven years later, after stints as medical affairs director, government relations director and chief operating officer, he was named Woodland Hills-based CareAmerica's CEO in 1993. Although he is among the burgeoning ranks of physician executives, he is one of only a handful who are at the helm of an HMO. The 11 employees that were at CareAmerica when Southam started have grown to more than 800.

CareAmerica started up under the direction of the former HealthWest, a medical services management company. It became a UniHealth affiliate after HealthWest merged with Lutheran Health Systems in 1988, creating the Burbank-based UniHealth operation.

A niche HMO, CareAmerica focuses on the small market (generally companies with 100 employees or less). It added Medicare enrollees in mid-1991, a move that has more than doubled revenues since.

Altogether, CareAmerica has about 240,000 enrollees - all in Southern California - and annual revenues of $425 million on the health plan side. About 35,000 of its members are Medicare beneficiaries.

Heath Cal, a workers' compensation/life insurance subsidiary CareAmerica acquired a year ago, kicks in an additional $100 million a year and has an established business base in Northern California.

"CareAmerica got started as a narrowly focused organization, competing in a market that was already reasonably well saturated," Southam says. "We're a mid-size player in a highly competitive market, and have had to keep a tight focus on a few core product lines in order to remain competitive."

A native of New Jersey who relocated to California for his medical school education, Southam became interested in health care delivery while in college. He majored in neurosciences, but also studied economics on the side.

"I had a fascinating professor who taught the microeconomics of regulated industry. He also ... had a passion for health care, and would often go on hourlong tangents in the subject," Southam recalls. "I got really interested in the delivery of medical care. To me, it's interesting, stimulating and rewarding."

So much so, Southam was inspired to earn a master's degree in public health while he was in medical school.

Southam picked California for his education and life after an eight-month stint working in a Southern California research laboratory prior to medical school.

"It was during the drought, and it was dry when I was out here. When I went back home to fill out medical school applications, it was raining for parts of 50 consecutive days," he says. "I also thought California would be a place for incredible opportunity."

Colleagues say Southam's medical and management background bring a perfect mix of experience for the job.

"He is in a unique position where he possesses the business sense of an executive, along with the compassion of a family doctor," says Myra Snyder, executive director of California Association of Health Maintenance Organizations, a Sacramento-based trade group (Southam is on the CAHMO board of directors, and heads its medical affairs committee). "I think the people in HMOs are better served because Artie is involved. He's a very, very solid health care leader."

"It was clear early on he was very well suited for organization and management life," says Dr. Paul Torrens, professor of health services administration at the UCLA School of Public Health and one of Southam's professors. "He just represents the best kind of personal and professional qualities, possesses wonderful values, is very, very smart and is a first-rate manager."

Southam says his training as a physician comes into play almost every day: "It gives me a better understanding where all the parties in the health care system are coming from, and on the clinical, technological and physician issues. I think it also facilitates communication. I no longer take care of patients on a daily basis, but those experiences come back."

Southam professes that his dedication to plan enrollees surpasses all else.

"I think that the organization and myself have a lot of passion for the businesses we are in, whether they are an injured worker or a Medicare beneficiary," he says. "It's important we communicate that to them. It's a key thing."

As a manager, Southam treasures speed and efficiency, but believes in openness with his employees.

"We have a need to be spunky and quick, to be able to do new things and execute them fairly quickly and efficiently," he says. "I also believe in open communication with the employees regarding financial performance, the issue of values and the overall work environment. This needs to be a good place to work. I think how we treat the employees affects how they deal with members, physicians, other business partners and customers."

As for CareAmerica's future, Southam would like to expand enrollment into other nearby states.

It is also possible the company may go public, but that is at least three to five years down the road, he says.

In his spare time, Southam enjoys "jog-strolling" with his wife, often taking two of their three young daughters along in a double stroller. He also enjoys skiing, mainly at resorts in Colorado.

Looking back, Southam says in his wildest dreams he never envisioned himself heading an HMO. But now he has the job, he has no intention of leaving.

"I expected to be practicing medicine and in 20 years doing the medical staff leadership thing," he says. "I think the success of CareAmerica has been a wonderfully pleasant sunrise for me professionally ... nine days out of 10, I have the best job in the world."

RELATED ARTICLE: Snapshot

Arthur M. Southam

Native of: Demarest, N.J. Resident of: Santa Monica Age: 39 Education: B.S., Amherst College; master's in public health, M.D., UCLA; M.B.A., Pepperdine University Spouse: Beezie (obstetrician at UCLA/Santa Monica Medical Center