UnitedHealthcare's acquisition of Health Net's Northeast's licenses and rights to renew membership underscores that scale in local markets is an important asset as companies pursue growth and that local focus continues to be a hallmark of success for managed care companies, according to experts.
According to Margita Thompson, vp, external communications for Health Net Inc., Health Net of the Northeast's (HNNE) business has suffered in recent quarters due to issues of scale with a General and Administrative (G&A) expense higher than the industry standard (12% of premium for HNNE compared with a 7% of premium industry standard). "UnitedHealthcare will provide the scale needed to improve the business for the region, while Health Net will be better positioned to focus energy and resources on government and specialty programs, the Western health plans and new business opportunities," Thompson tells Managed Healthcare Executive.
"UnitedHealthcare has a long history in the Northeast and is committed to responding to local market needs while providing access to the innovative healthcare products, programs and technology applications of a company with national scale—all of which are vitally important considerations for our members," she says.
Going forward, Health Net will be a stronger, more streamlined company, with a Western region-focused health plan division and a government and specialty programs division, according to Thompson. "Our core assets are solid, our balance sheet is strong, and there are many opportunities for growth as well as margin expansion. We have a secure future and are well prepared to meet changes that may result from national and state healthcare reform and a challenging economic environment."