CaliforniaChoice Founders John Word and Rusty Brown Named Orange County Entrepreneurs of the Year.

Health/Medical Writers

ORANGE, Calif.--(BW HealthWire)--June 22, 2001

The creators of CaliforniaChoice, the nation's fastest-growing small group health purchasing alliance, have been named Orange County Entrepreneurs of the Year by Ernst & Young.

Co-founders and managing partners John M. Word III and Edward J. "Rusty" Brown were presented this prestigious award at a black-tie gala Thursday evening at the Marconi Automotive Museum in Tustin, Calif.

Launched just five years ago, CaliforniaChoice has experienced phenomenal success, tripling in size over the past 24 months and now administering health benefits to 150,000 people and 10,000 employers in California. Equally significant, the company has taken the lead in reshaping the market and in encouraging health insurers to better respond to employers' concerns for controlling costs while providing their employees easy access to health benefits that are right for each individual's needs and budget.

Prior to CaliforniaChoice, small employers in the state had no choice but to purchase a single health plan for all employees on a "one-size-fits-all" basis. This created problems for both the employee, who had no choice as to their carrier and limited choice of physician, as well as the employer, who found little defense against rising healthcare costs. With no outside funding and no private sector precedence, Word and Brown developed CaliforniaChoice to directly address these shortcomings.

Under the CaliforniaChoice model, each employer sets a defined contribution level he or she wishes to contribute toward employee coverage. Their employee then receives this contribution as a "credit" or voucher toward their health insurance. The employee is then free to choose from eight major HMO and PPO options, all offered and administered through CaliforniaChoice and all competing based on provider network, benefit structure, service and rates.

The employee makes a decision based on family medical needs, individual preferences, doctor availability and budget. The employee has the flexibility to change their selection, and the employer has the ability to alter their financial contribution annually.

In building this company, Word and Brown recruited and developed a new distribution system of over 3,000 independent insurance brokers and built an entirely new infrastructure and software system capable of billing and remitting more than a quarter of a billion dollars in annual premium billings. This past year they also constructed the only Web-enabled "real-time" centralized benefits exchange Web site in the industry.

CaliforniaChoice is the second successful business venture Word and Brown have developed as partners. In 1985 they founded Word & Brown, which grew to become one of the largest independent small group health distributors in America. From this base, the two partners saw that many of the problems of instability in small group health plans could be attributed directly to lack of choice in health plan offerings.

Small group employers could generally only afford to offer a single, low-priced managed care plan; and employees felt they were being forced into plans that did not include their physicians and did not meet their needs. In direct response to this challenge, CaliforniaChoice was launched in 1996 as the first private, multiplan small group health insurance program in the state.

Word, a former president of the California Association of Health Underwriters, began his career in health insurance in 1972 when he founded Omega Insurance Services, a retail brokerage firm specializing in small group health insurance. As a top producer, he witnessed firsthand the myriad of products, underwriting guidelines and policy requirements brokers needed to sort through before they could provide accurate insurance quotes to their customers. Believing there must be a better, faster and less frustrating way, in the early 1980s he developed an idea of producing and distributing a much-needed, computerized quoting system for agents. Word shared this idea with Brown, and together they founded Word & Brown.

Brown got his start in the insurance field in 1975 as a debit agent for John Hancock Mutual Life and became the youngest agent to ever qualify for John Hancock's prestigious President's Honor Club. In 1980 he transferred to the Newport Beach John Hancock branch office, where for two consecutive years his agency ranked number one in the nation. In late 1982 Brown co-founded a small group General Agency in Tustin. There he honed his skills as one of America's most innovative, mass-market distributors of health insurance, and met his future partner, Word.

Further information on CaliforniaChoice may be obtained at www.calchoice.com.