Battle of the blues: two of the largest and most successful health plans in Pennsylvania have severed a long-standing relationship. Who is poised to win the fight for the lucrative market of Central Pennsylvania? (Life/Health: Market Competition).The breakup breakup
The division of a company into separate parts. The most famous breakup to date was the 1984 division of AT&T (formerly, American Telephone & Telegraph Company). This breakup was intended to increase competition in the communications industry. of Pennsylvania health plans Highmark and Capital Blue-Cross mimics a difficult divorce. The termination of the companies' jointly run health plan marketed in the Central Pennsylvania/ Lehigh Valley The Lehigh Valley or the Allentown-Bethlehem-Easton, PA-NJ metropolitan area is a metropolitan region in eastern Pennsylvania and western New Jersey, in the United States. It is the third-most populated metropolitan region in Pennsylvania, after Philadelphia and Pittsburgh. area is replete re·plete
1. Abundantly supplied; abounding: a stream replete with trout; an apartment replete with Empire furniture.
2. Filled to satiation; gorged.
3. with bitter words, disagreements over who's at fault and a custody battle Noun 1. custody battle - litigation to settle custody of the children of a divorced couple
judicial proceeding, litigation - a legal proceeding in a court; a judicial contest to determine and enforce legal rights over subscribers. Seven months after the decision to disengage dis·en·gage
v. dis·en·gaged, dis·en·gag·ing, dis·en·gag·es
1. To release from something that holds fast, connects, or entangles. See Synonyms at extricate.
2. the 40-year-old joint operating agreement Any contract, agreement, Joint Venture, or other arrangement entered into by two or more businesses in which the operations and the physical facilities of a failing business are merged, although each business retains its status as a separate entity in terms of profits and , the companies have invested a total of nearly $30 million in restructuring and have created competing Blue Cross Blue Shield Blue Shield A US not-for-profit health care insurer that is a reimbursement intermediary for physicians. Cf Blue Cross. plans at breakneck break·neck
1. Dangerously fast: a breakneck pace.
2. Likely to cause an accident: a breakneck curve. speed.
Under the agreement, Capital provided hospital coverage and Highmark provided a physician network to nearly 1.45 million people. Now both companies provide integrated health insurance coverage in the area, with Highmark marketing under the name Pennsylvania Blue Shield.
The shattered shat·ter
v. shat·tered, shat·ter·ing, shat·ters
1. To cause to break or burst suddenly into pieces, as with a violent blow.
a. relationship is affecting both companies' providers and customers. Although the Pennsylvania Insurance Department has never witnessed a dissolution of a business relationship quite like this one, it doesn't see any harm to consumers. "It might be premature to speculate on the effect on consumers, but the spilt spilt
A past tense and a past participle of spill1. does create additional health products and services in the marketplace. Also, both entities are retaining relatively large provider networks," said Rosanne Placey, a department spokeswoman.
Since the plans are headquartered about five miles apart on opposite banks of the Susquehanna River Susquehanna River
River, central New York, Pennsylvania, and Maryland, U.S. One of the longest rivers in the eastern U.S., it is about 444 mi (715 km) long. It rises in Otsego Lake, central New York, and winds through the Appalachian Mountains before flowing into northern in Harrisburg, and each chief executive officer has spent 30 years with his company, it's no surprise personal relationships come into play. The CEOs--Capital's Jim Mead and Highmark's John Brouse--are friends. Paul McMillen, executive vice president of the Pennsylvania Automotive Association and a Highmark customer, is also one of Mead's neighbors. As a former member of Capital's board, he "sat through the whole mess" and confesses the breakup "emotionally hurt me." Roger Longenderfer, who heads one of the region's largest hospitals, Pinnacle Health, said he still hears rumors they'll get back together.
The national Blue Cross Blue Shield Association wouldn't comment on the breakup, according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. spokesman Terry Cooney. Both CEOs express regret over the breakup. Brouse said the "feelings were not good at all," and Mead offered that while the decision wasn't personal, "you can't help but have emotions about it; we've been in business for 40 years. Our differences are philosophical, not personal, and we have to implement what the boards want."
Uncorporate-like language has been fired from both companies since the spilt. And both sides claim the other tossed the first salvo. Mead said Highmark called him and another executive incompetent. Capital responded by reminding consumers that Highmark said it wants to "gorge itself on acquisitions:' Mead said the strongly worded responses "come from the environment we live in" and show that "we're not country bumpkins here:" Brouse said, "Talk is cheap and we ignore it."
The Pennsylvania Blues plans are among the odd ducks in the national Blues organization. In every U.S. state A U.S. state is any one of the fifty subnational entities of the United States, although four states use the official title "commonwealth". The separate state governments and the federal government share sovereignty, in that an American is a citizen both of the federal entity and or territory except Pennsylvania and Washington state, the hospital and doctor coverage functions are integrated, although some use only one service mark, the cross or the shield. The plans are consolidating to leverage economies of scale to fight the competition--in 1990 there were 77 plans nationwide; now there are 42.
This urge to merge is the basis for the philosophical difference both companies say is at the heart of the breakup. Brouse and his board wanted the national model of merging the Blue Cross and Blue Shield organizations, and Mead and his board believed that health care is local.
As in nearly all breakups, each party accuses the other of causing the split. The companies point to different dates as the beginning of the termination. Capital, the smaller company with $630 million in reserves vs. Highmark's $2.3 billion, puts the end of the relationship at Sept. 10, 2001, when Highmark said it was dissolving the joint operating agreement. Highmark says the split occurred April 26, 2001, when Capital informed its employees it was reorganizing into an integrated health plan.
Brouse's former careers as an English teacher and a disc jockey disc jockey (DJ)
Person who plays recorded music on radio or television or at a nightclub or other live venue. Disc jockey programs became the economic base of many radio stations in the U.S. after World War II. are evident when his sonorous sonorous
resonant; sounding. voice peppers his comments about the breakup with words like "truncated truncated adjective Shortened " and "vitriolic." The slim, nattily nat·ty
adj. nat·ti·er, nat·ti·est
Neat, trim, and smart; dapper.
[Perhaps variant of obsolete netty, from net, elegant, from Middle English, from Old French; see dressed 62-year-old CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. firmly states that Highmark's board came to its decision on Sept. 10 only after feeling all options were exhausted. Discussions to create a new business relationship with Capital began in 1998 and continued through 2001, he said.
On April 26, 2001, Capital notified Highmark of its decision to create an integrated company and invited Highmark to be a partner. But since that business model went against Highmark's plan to merge all the state's Blue Cross Blue Shield plans into one company to achieve economies of scale, its board declined the offer. "They told us they were going to create a new company and this company was going to provide a complete package. So to that extent they would have been competing with what we were providing here, and to the extent they would be successful we would be losing revenue and customers. And that doesn't work for us," Brouse said.
After Capital's April announcement, heavy negotiations were conducted into September, Brouse said--mostly due to nudging from the Blue Cross Blue Shield Association. Both sides say that during the critical negotiation time in the spring and summer of 2001, each stretched the limits to reach a decision to stay together. Highmark spokeswoman Karen Early recalls dozens of negotiation meetings that produced waist-high stacks of proposals with myriad configurations.
Mead said that when Highmark severed sev·er
v. sev·ered, sev·er·ing, sev·ers
1. To set or keep apart; divide or separate.
2. To cut off (a part) from a whole.
3. its ties on Sept. 10, there was a proposal on the table "they will live to regret they didn't take." Capital was willing to be a subsidiary of a larger company and even agreed to give up the Blue Cross trademark and license it to the holding company "I have to tell you I gave about a pint and a half of blood getting the board to agree that's the path we should take," Mead said.
Whereas Brouse is subdued sub·due
tr.v. sub·dued, sub·du·ing, sub·dues
1. To conquer and subjugate; vanquish. See Synonyms at defeat.
2. To quiet or bring under control by physical force or persuasion; make tractable.
3. , Mead is gregarious gre·gar·i·ous
1. Seeking and enjoying the company of others; sociable. See Synonyms at social.
2. Tending to move in or form a group with others of the same kind: gregarious bird species. . Before a backdrop of photos showing him with dignitaries, including Alan Greenspan Alan Greenspan
Dr. Greenspan is Chairman of the Board of Governors of the Federal Reserve System. Dr. Greenspan also serves as Chairman of the Federal Open Market Committee (FOMC), the Fed's principal monetary policymaking body. and President Bush, the burly bur·ly
adj. bur·li·er, bur·li·est
Heavy, strong, and muscular; husky. See Synonyms at muscular.
[Middle English burlich, from Old English *borlic, excellent; see , shirt-sleeved Mead told his company's tale sprinkled with anecdotes concerning his employees. A self-declared workaholic work·a·hol·ic
One who has a compulsive and unrelenting need to work. who comes in on weekends and chaired the board of the Federal Reserve Bank in Philadelphia as a hobby, Mead also isn't afraid to admit that a conservative businessman such as himself has to change with the times.
According to Mead, the beginning of the end came when Pennsylvania Blue Shield consolidated with Blue Cross of Western Pennsylvania Western Pennsylvania consists of the western third of the state of Pennsylvania in the United States.
Pittsburgh is the largest city in the region, with a metropolitan area of about 2.4 million people, and is the cultural center for Western Pennsylvania. in 1996. Until that time, Pennsylvania Blue Shield was offering physician coverage to complement Blue Cross' hospital networks. That consolidation created Highmark, an integrated company with 3 million customers in 29 western counties. Pennsylvania Blue Shield brought national dental, vision and life and casualty companies that cover more than 23 million lives, 16 million of which are outside Pennsylvania, to the consolidation. "I've always said that kind of upset the equilibrium. The merger hit the nose of the rocking horse and it would take a while for it to settle back down again," Mead said.
A local emphasis is important to Capital. "I think part of the problem is a national organization trying to apply a cookie-cutter solution to health care, and it doesn't work that way Our board thinks it's important to stay close to the customer and the provider," Mead said.
The local angle Capital extols fires up Brouse. Calling it a "nonsensical argument," he points Out that Highmark can be considered more local to the central Pennsylvania region than Capital on many levels. "Is it the number of employees? We win if that's the case. [Highmark has 5,700 to Capital's nearly 2,000] By virtue of where the CEO sits? Although I do business in Pittsburgh, I live in Harrisburg. We pay more taxes; we support the United Way more than they do," Brouse said.
When Highmark was created, Pennsylvania Blue Shield was also doing business with Blue Cross of Northeastern Pennsylvania This mountainous area of Pennsylvania includes the Pocono Mountains, the Endless Mountains and former anthracite coal mining cities and towns, including Carbondale, Scranton, Pittston, Wilkes-Barre, Nanticoke and Hazleton. U.S. Presidents Harry Truman and George W. and Independence Blue Cross in the Philadelphia area, and it continues to do so today. "Highmark was going to be a consolidator, and they were going to grow and centralize cen·tral·ize
v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es
1. To draw into or toward a center; consolidate.
2. their power. At the same time, Aetna was threatening all of us," Mead said.
In addition, during this period Capital was looking at the problem of when to proceed with several projects it had put on hold while it was looking to see if it would have a partner. Because it didn't want to invest and then reinvest re·in·vest
tr.v. re·in·vest·ed, re·in·vest·ing, re·in·vests
To invest (capital or earnings) again, especially to invest (income from securities or funds) in additional shares. , Capital delayed upgrades to its information systems in response to the federal Health Insurance Portability and Accountability Act The Health Insurance Portability and Accountability Act (HIPAA) was enacted by the U.S. Congress in 1996.
According to the Centers for Medicare and Medicaid Services (CMS) website, Title I of HIPAA protects health insurance coverage for workers and their families when . "So the board said go ahead and begin to develop the infrastructure of the organization you want to be, but at all points leave the door open en to join Highmark, because that makes the most sense," Mead said.
Gloves Come Off
As in most troubled breakups, legal aspects arose. in January, Capital filed legal papers with Pennsylvania insurance regulators, alleging Highmark hadn't received state approval to expand in the central and Lehigh Valley regions of the state. At the time, Mead said the complaint was made because Highmark was operating at an unfair advantage and was depriving consumers of important safeguards. The petition asked the insurance department to put the brakes on Highmark's expansion until and unless it obtained the approvals required by law. A few weeks after the complaint was filed, however, the insurance department dismissed the petition, stating that no statute said Highmark couldn't do business as both a professional-service and hospitalization hospitalization /hos·pi·tal·iza·tion/ (hos?pi-t'l-i-za´shun)
1. the placing of a patient in a hospital for treatment.
2. the term of confinement in a hospital. health insurer. "They raise no controversy or uncertainty whether Highmark currently is operating legally under its two certificates of authority. It is," Pennsylvania Insurance Commissioner M. Diane Koken said in her decision.
Currently, the issue isn't a major talking point for either side. Mead alluded to Highmark having a court case lurking See lurk.
(messaging, jargon) lurking - The activity of one of the "silent majority" in a electronic forum such as Usenet; posting occasionally or not at all but reading the group's postings regularly. that could challenge its existence, and Highmark's Early said all the parties have withdrawn from the lawsuit, except one physician.
Capital's action was based on a previous effort led by the Pennsylvania Society The Pennsylvania Society is a non-profit, non-political organization founded in 1899 and incorporated in 1903, headquartered in Sellersville, Pennsylvania, which has a membership roster including many leaders of Pennsylvania business, educational, civic, governmental and political of Internal Medicine and Dr. Robert B. Sklaroff, who charged that public hearings never were held by state regulators when Pennsylvania Blue Shield consolidated with Blue Cross of Western Pennsylvania. Currently, the matter is pending before the insurance department.
Like all long relationships, this one is difficult to untangle. The companies still are managing about 55% of business together in their joint operating agreement. The 1.45 million lives they insure individually and through employer group employer group Association of employers Managed care An entity with a current group benefits agreement in effect with a health plan to provide covered health care services to its employee-subscribers and eligible dependents. plans, however, are slowly being switched as employer group renewal dates roll around and they choose Capital, Pennsylvania Blue Shield or a competitor, such as HealthAmerica or Aetna Health Inc. Highmark reports great success so far, picking up 62% of the contracts it jointly shared with Capital as of August. Highmark counts Harley-Davidson, Rite Aid Rite Aid (NYSE: RAD) is a United States retailer and pharmacy chain, operating over 5,000 stores in 31 states and the District of Columbia. Rite Aid Corporation is one of the nation's leading drugstore chains. , the State System of Higher Education higher education
Study beyond the level of secondary education. Institutions of higher education include not only colleges and universities but also professional schools in such fields as law, theology, medicine, business, music, and art. and the Pennsylvania State Police The Pennsylvania State Police (PSP) is the state police force of Pennsylvania, responsible for statewide law enforcement. It was founded in 1905 by order of Governor Samuel Pennypacker, in response to the private police forces used by mine and mill owners to stop worker strikes among its larger contracts.
Capital announced it's "exactly on target," reporting it has signed 52% of the once-shared group memberships. Capital is writing business with Air Products and Chemicals, Densply and Harsco.
After Sept. 10, both companies tapped people to drive their transformations. Capital chose Anita Smith, executive vice president, chief operating officer Chief Operating Officer (COO)
The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , to create a new company in nine months. The slim executive, who plays tennis as a hobby but looks like a professional in the sport, said her early athletic training athletic training Sports medicine The practice of physical conditioning and reconditioning of athletes and prevention of injuries incurred by athletes. See Athlete, Athletic trainer. formed her natural competitive spirit. "I always wanted to work to improve health care. When the termination came along, and I wasn't able to focus on that because they said, 'we are coming after you'--I'm the kind of individual who will dig in and show that yes, something good can come out of this," Smith said.
Under Smith's leadership, Capital employed Capital Employed
1. The total amount of capital used for the acquisition of profits.
2. The value of all the assets employed in a business.
3. Fixed assets plus working capital.
4. Total assets less current liabilities. strategies that ranged from holding town meetings, to touching base with its customers, to celebrating small victories with impromptu A Windows query and reporting tool from Cognos with support for a large variety of databases. It is capable of generating cross tabs for spreadsheets such as Excel, Lotus for Windows and Quattro Pro for Windows. conga lines. The biggest challenge was to sign 6,000 physicians and create a physician network.
Smith is proud that Capital came into the market, built a new claims system and technology platform and signed a network of physicians while operating as usual as the agent plan for the joint agreement, which meant it sold, serviced and enrolled groups. "We did this all at once while our competitor only had to come into the market. They didn't have to service the existing business'" Smith said.
To speed up the process of signing the network of physicians, Capital took suggestions from the Pennsylvania Medical Society and rewrote the contracts using a simple, easier-to-understand format. The simplification allowed the office managers to pass the contracts directly to the physicians for signing, bypassing any legal steps. Smith also encouraged her employees to reach the goal of signing 6,000 physicians by noting weekly progress on a seven-foot-high thermometer thermometer, instrument for measuring temperature. Galileo and Sanctorius devised thermometers consisting essentially of a bulb with a tubular projection, the open end of which was immersed in a liquid. placed prominently near the company's main elevators. The company surpassed the goal in August. "Today our network is as large as the day we separated," Smith said.
But contract wording wasn't the only problem Capital encountered with physicians. Some physicians refused to sign Capital's contracts, protesting that the insurer's reimbursement Reimbursement
Payment made to someone for out-of-pocket expenses has incurred. rates were too low Bob Orzechowski, administrator of the AGES Obstetrics and Gynecology obstetrics and gynecology
Medical and surgical specialty concerned with the management of pregnancy and childbirth and with the health of the female reproductive system. practice in Wyomissing, Pa., said Capital has come to terms on the reimbursement rates but now is facing another dilemma. As of late August, AGES' actual contract wasn't signed, although the practice had patients coming in for annual exams with Capital coverage. Orzechowski said that while he's sure he doesn't have a contract because Capital is backed up in that area, he is forced to charge patients the $100 fee for the visit because there is no contract in place. And after the contract is signed, credentialing will take another four to six weeks, he said. The holdup also plays havoc with physicians' cash flow because reimbursement doesn't occur until after the credentialing process is completed. "But most of the turbulence (related to the transit ion) is pretty much over," Orzechowski said.
Pennsylvania Blue Shield's transition team is headed by another athlete, Senior Vice President--Mid-Atlantic Region Mike Fiaschetti, who was responsible for the region during the joint agreement with Capital. The father of three, who was an active hockey coach, used those skills to erect a new company A five-year veteran with the company, Fiaschetti described the experience of building Pennsylvania Blue Shield "as the most intense 12 months of my whole career. It was like starting a whole new company; we had to do a lot of things all at once."
Fiaschetti assembled a 25-person cross-functional team In business, a cross-functional team is a group of people with different functional expertise working toward a common goal. It may include people from finance, marketing, operations, and human resources departments. after Capital's announcement in the spring of 2001. The team crafted a "where the rubber meets the road" business plan that would show how Highmark would implement each of the steps to be able to compete. The team worked on developing a sales forecast Sales forecast
A key input to a firm's financial planning process. External sales forecasts are based on historical experience, statistical analysis, and consideration of various macroeconomic factors. , sales-force structure, products and hospital contract wording, and investigated how to modify the company's information system to accept the coming changes. Pennsylvania Blue Shield invested around $15 million in preparing to operate in the Central region and added about 250 employees, Fiaschetti said.
The change is bringing a time of confusion to hospitals, also. When new health insurers enter a market, hospitals must educate physicians and consumers, said Pinnacle Health's Longenderfer. "There's always a period of confusion, and we try to gear up for that with our discharge, registration and utilization staff," Longenderfer said. Right now Longenderfer doesn't anticipate any problems with Pennsylvania Blue Shield since "they seem to have their act together in the Western part of the state.
"They're not green. But what's it going to be like five to 10 years from now?" Longenderfer said. According to Christian Miles, a life/health analyst at A.M. Best Co., Pennsylvania Blue Shield is in an extremely good position, since it can leverage the knowledge gained from running Highmark in running its new entity.
When Pennsylvania Automotive Association's McMillen chose Pennsylvania Blue Shield to insure the 1,300 new car dealers his group represents, it was a hard decision. As a former member of both boards, McMillen selected Blue Shield based on price and because it enabled him to manage his claims and contracts electronically, whereas at the time of his decision last April, Capital couldn't do so. He also knew that part of Capital's marketing team left to work for Blue Shield. "Look at it from my perspective: Pennsylvania Blue Shield had the rate advantage, I can communicate with them, I know all the players, and the guts went over there," McMillen said.
Tom Henshke, director of the Small Manufacturers Council, which represents 5,000 members statewide, recently chose Capital over Pennsylvania Blue Shield because of the "relationship equity." Although the council previously contracted with the Blues, Henshke decided on signing with Capital because of its competitive rates, flexible plan and the relationship he has with Mead. "You get to see him and talk to him; that's really important," Henshke said. Although Henshke saw several Capital employees leave to go to Pennsylvania Blue Shield, he was impressed with the competitive expertise that Capital hired to fill the vacated positions.
Employees did leave Capital for Highmark, including Highmark's current vice president of finance and chief actuary actuary
One who calculates insurance risks and premiums. Actuaries compute the probability of the occurrence of such events as birth, marriage, illness, accidents, and death. , William Cashion. The count is more than 50, according to Highmark, while three or four have left Highmark for Capital. Mead is philosophical on the subject: "Some people said, 'Capital has one hell of a job to do.' Not everybody is a big risk taker tak·er
One that takes or takes up something, such as a wager or purchase: There were no takers on the bets.
Noun . If they didn't think we could pull this off, the best thing they could have done is to jump ship."
As the companies continue the separation process, they're approaching critical dates that will affect their viability. Jan. 1 is important because typically 50% to 60% of employer groups renew on that date. Another upcoming wild card is the announcement, expected in October, of a new CEO to fill Brouse's shoes when he retires next year. A.M. Best's Miles doesn't expect any surprises from the changing of the leadership. "There's no disadvantage due to the changing of the CEO for Highmark, because it has a seasoned, consistent senior management team and a lot of experience to choose from," Miles said.
Mead isn't ruffled ruf·fle 1
1. A strip of frilled or closely pleated fabric used for trimming or decoration.
2. A ruff on a bird.
a. A ruckus or fray.
b. Annoyance; vexation.
4. by the impending im·pend
intr.v. im·pend·ed, im·pend·ing, im·pends
1. To be about to occur: Her retirement is impending.
2. CEO change, but thinks he would be more concerned if Highmark were still a partner. "You look at the successor of the competition differently than a business partner. It's like me worrying about who the next CEO of HealthAmerica will be," Mead said.
Highmark still has mergers on its mind. Brouse said the impending merger with the Independence Blue Cross plan is in suspended animation sus·pend·ed animation
A temporary interruption of the vital functions resembling death. because of his retirement. If Highmark joins with Independence, it would create one of the largest health plans in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , a fact that might not be good news for Capital. The merger would create a combined total of almost 6 million customers in their core markets of Western and Southeastern Pennsylvania counties. Highmark's year-end 2001 products covered more than 23 million people, 16 million of whom reside outside of Pennsylvania. Independence Blue Cross' family of companies covered 4.2 million members as of year-end 2001, 1.3 million of whom live outside of Pennsylvania, adding up to a combined total of 27 million. In comparison, Aetna serves about 37 million members in its health. group and dental programs.
After all this, would Capital reconsider a merger with Highmark? "I believe never say never," Mead said. "But we don't have the time or energy, and it's not appropriate because the board gave us the direction to get this thing going and stabilized."
RELATED ARTICLE: Capital BlueCross
Headquarters: Harrisburg, Pa.
CEO: Jim Mead
Ranking in Pennsylvania according to net premiums written: No. 3 among Blues plans
Group members: 1.3 million
Number of employees: 2,000
Marketplace: 21 counties in central Pennsylvania and the Lehigh Valley
Major products: Traditional indemnity, preferred provider organization pre·ferred provider organization
Abbr. PPO A medical insurance plan in which members receive more coverage if they choose health care providers approved by or affiliated with the plan. , point of service, Medicare supplemental and health maintenance organization (through Keystone key·stone
1. Architecture The central wedge-shaped stone of an arch that locks its parts together. Also called headstone.
2. The central supporting element of a whole. Health Plan Central).
Web site: www.capbluecross.com
Headquarters: Camp Hill, Pa., and Pittsburgh
CEO: John Brouse
Ranking in Pennsylvania according to net premiums written: No. 1
Group members as of July 2002:
Health insurance members: 4.8 million
Health insurance contracts: 2.7 million
Total members served nationwide: 23.9 million
Number of employees: more than 11,000
Marketplace: Health insurance in Pennsylvania; dental, vision, life and disability nationwide.
Major products: health, dental and vision insurance, as well as group life and disability insurance. Highmark also administers Medicare Part A and Part B for the federal government for Pennsylvania Medicare recipients.
Web site: www.pablueshield.com, www.highmark.com
What's at Stake
The Central Pennsylvania/Lehigh Valley region that Highmark/Pennsylvania Blue Shield and Capital BlueGross are battling over is a vital economic sector of the state. Both Highmark and Capital are attracted to the area's strong manufacturing base, stability created by the state government's workforce, potential significant market share and a younger demographic. "This is a vital region that is growing faster than either Philadelphia or Pittsburgh," said Highmark's Mike Fiaschetti, senior vice president of the MidAtlantic region.
Potential insurance contracts flow from the manufacturing base, including Harley-Davidson, Hershey Foods and Mack Truck. "This is a very stable area that historically has never experienced the wild swing the other parts have. There's a nice mix of manufacturing and government in the region," said Capital's president and chief executive officer, Jim Mead.
Highmark President and CEO John Brouse points to the area's attractive younger demographic, which helps to balance the aging factor of an insurer's risk pool. For example, the U.S. Census reports York County's population is bulging in the 25-to-54 age group. And the Lehigh Valley's projected demographics show that about 50% of its population will be in the 18-to-54 age group by 2006. With a population of about 3 million up for grabs in this region, the potential premium is the brass ring brass ring
An opportunity to achieve wealth or success; a prize or reward: "missed the brass ring of American success" Lewis H. Lapham.
Noun 1. both companies are eyeing.
Capital is the company with more at stake in the battle for the millions in premium, said Christian Miles, a life/health analyst at A.M. Best Co. Even though Highmark/Pennsylvania Blue Shield has done business in the area for 40 years and has headquarters in the Harrisburg suburb of Camp Hill, 70% of its total health-care revenue is generated through the Highmark Blue Cross Blue Shield program in the western part of the state. "So Capital is defending its home turf," Miles said.
Looking for Looking for
In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. Recognition: A Hand and a Blue Man
Creating two new brand identities after presenting one face to the public for 40 years isn't easy. "To try to establish ourselves as a separate company is a challenge, because we took great pains to make sure people thought Blue Cross Blue Shield were one. Now we're saying we're not one--we're really different," said John Brouse, president and chief executive officer of Highmark Inc.
Highmark and Capital BlueCross have terminated a jointly run health plan they marketed in the Central Pennsylvania/Lehigh Valley area for the past 40 years. Now both companies offer their own, integrated hospital and physician coverage in the area, with Highmark marketing under the name Pennsylvania Blue Shield.
Highmark's advertising theme is "have a greater hand in your health." The campaign is based on Highmark's research finding that employers are concerned about the unending flow of health insurance rate increases. Highmark sees the answer in asking consumers to take a personal interest in their health care. Pennsylvania Blue Shield is backing the campaign with its myriad self-help programs available on either Blue Shield's or Highmark's Web site. Consumers can access information to join a stop-smoking group or the heart-healthy Dr. Dean Ornish Dean Michael Ornish (born July 16, 1953) is president and founder of the nonprofit Preventive Medicine Research Institute in Sausalito, California, as well as Clinical Professor of Medicine at the University of California, San Francisco. program. The ads feature a blue hand appearing on a wall next to a woman jogging jogging
Aerobic exercise involving running at an easy pace. Jogging (1967) by Bill Bowerman and W.E. Harris boosted jogging's popularity for fitness, weight loss, and stress relief. , or in a humorous tone, on the stomach of an overweight man. The campaign will be seen on local television, on billboards throughout the 21-county Blue Shield turf and in local newspapers. "There's quite a dichotomy between Capital's ads and our ads. Theirs are futuristic fu·tur·is·tic
1. Of or relating to the future.
a. Of, characterized by, or expressing a vision of the future: futuristic decor.
b. and ours are homespun, playing to the values of Central Pennsylvania," Brouse said.
Capital's advertising campaign featuring a blue man was born from a limited budget and the need to get a reassuring message to the community in a hurry. After Highmark announced Sept. 10, 2001, that it was pulling out of the joint agreement, Capital had to hit the air with a campaign by Jan. 1, said Anita Smith, Capital's executive vice president, chief operating officer. "We had to assure the community that we were going to be here," she said. Because of the limited budget, Capital opted for an animated commercial, and the agency created the blue man, which is actually the figure appearing inside the Blue Cross logo. Capital's second phase of its campaign highlights its "simple" approach to health coverage. The new ads still use the blue man and feature the voice of Tom Cavanagh Thomas Cavanagh (born October 26, 1963) is a Canadian actor. Personal life
Cavanagh was born in Ottawa, Ontario, Canada, and moved with his parents to a small village in Ghana when he was six years old. , star of NBC's comedy show "Ed."
Capital President and CEO Jim Mead said the blue man's message is a powerful one. At a town meeting in Reading, a man holding a box approached Mead. "I looked at this guy and wondered what is this going to be. He opened the box and showed a little blue man made out of Nutty Putty. The guy told me, 'If your ads can get a six-year-old to take his Nutty Putty and make your ad, you are connected,'" Mead said.
"We took the man out of the center of the logo. The competition has a snake in. the center of their logo--we know they aren't going to take that out," Mead said.