Home Grown

October 1, 2005

Small towns are known for close-knit communities, home cooking and home-grown enterprise. In Champaign-Urbana, Ill., even the CEO of the local managed care plan is a hometown native. Jeff Ingrum grew up in the Champaign area and says he never saw himself as the CEO of any health plan other than Health Alliance because of his long-standing familiarity with the people, the providers and the community.

Small towns are known for close-knit communities, home cooking and home-grown enterprise. In Champaign-Urbana, Ill., even the CEO of the local managed care plan is a hometown native. Jeff Ingrum grew up in the Champaign area and says he never saw himself as the CEO of any health plan other than Health Alliance because of his long-standing familiarity with the people, the providers and the community.

Health Alliance is one of just a few provider-sponsored plans in the country but has managed to persevere for 25 years, a credit not only to its deep community roots but also its strategic growth. Of 102 Illinois counties, the plan offers products in 88 and has branched out to neighboring states as well. Another solidifying asset is the plan's high concentration of state employees and their dependents. Of the current 250,000 plan members, 90,000 come from the State of Illinois.

Ingrum says branching out while still maintaining the state employee niche has kept the plan in a growth mode, unlike other provider-sponsored plans in the country that stayed small only to be acquired or run out of business by large national competitors with economies of scale.

Health Alliance-which was founded as CarleCare, named for the provider sponsor, Carle Clinic-began in 1980 as a not-for-profit HMO under the laws that Congress established to spawn the growth of HMOs and managed care in the United States.

In time, two dynamic shifts set up the plan to grow beyond its original product. First, the organization converted to for-profit status in order to raise capital and make investments for long-term growth. Second, the name changed from CarleCare to Health Alliance to establish a separate identity that could carry over to new partnerships. Carle Clinic and Health Alliance remained closely aligned in the eyes of the public, according to Ingrum, but the plan was able to separate its identity successfully as a payer.

Driving forces

In the early '90s, healthcare reform through managed care became a hot political topic, tipping off Health Alliance executives to the possibility that small plans might not survive such a reform. With 75,000 members in a 90-mile radius, the organization needed to increase its reach.

"We also had an opportunity then because the state was looking for ways to control its healthcare costs and to expand managed care into more rural markets," Ingrum says. "One of the areas lacking in coverage for state employees was in the state capitol, Springfield, which has a high concentration of state employees with the legislature and all the departments and agencies based there. The city probably had close to 50,000 lives associated with state government."

With its already established service to 30,000 state employees in the Champaign-Urbana area, Health Alliance seemed a natural fit for expansion into Springfield.

Springfield Clinic, a multispecialty group similar to Carle Clinic, entered a partnership with Health Alliance in 1994, continuing the provider-sponsored model and marking a defining moment in the plan's history. For the first time, Health Alliance-now with HMO and PPO products-moved beyond the borders of Carle Clinic and gained significant marketshare in Illinois.

Through the decade, the plan expanded into rural markets with medical group practices that had developed physician hospital organizations able to network with payers. Other new alliances included Peoria's Methodist Medical Center and areas in Iowa.

Increased demand for managed care, especially for state employees, and the foreshadowing of healthcare reform drove Health Alliance's growth strategy. Within five years, membership grew from about 100,000 members to 240,000 members, many of them state employees.