New Pru has critical market evaluation strategy
New Pru has critical market evaluation strategy
MCO will grow some markets, exit others
Prudential HealthCare has named a new president to help turn the struggling company around, but industry analysts say the real test of the big-10 company’s survival will be whether it can become more competitive amid the ever-increasing aggressiveness of the managed care era.
Experts interviewed by Physician’s Managed Care Report say Roseland, NJ-based Prudential is part of a dying breed of managed care companies that are being swallowed up by for-profit, public health maintenance organizations that have developed their own niche. "The successful companies are the ones who are not seeking to be many things to many people," says William Winkenwerder, MD, a former executive with Prudential HealthCare’s Southeast region and vice president of Emory Healthcare, an integrated health care delivery system in Atlanta. "They started out with a focus on being an HMO and have succeeded," he adds.
Physicians can expect changes
What does this mean for a company like Prudential that is tied to a parent company, namely Prudential Insurance of America? Will the new president and chief executive officer, Steve Shulman, who has a background as the founder of a specialty medical benefits company (Value Health), be able to bring a different management philosophy one that includes more willingness to spend money to make money to bear at Prudential Healthcare?
Overall, the change in leadership will undoubtedly mean some changes for physicians who currently contract with Prudential. Analysts and company officials disagree sharply on whether these changes will be positive or negative.
Physicians who are part of the Prudential system will either be pleased to be part of an expanded provider network or may find themselves being sold off to another group practice within a short time frame. "Our goal will be to build business in markets where we already are strong," says Prudential spokesman Kevin Heine. "We also plan to expand the provider base where we have no providers now. If you look at Shulman’s background, he has considerable experience in building a company from the ground up."
"There will be little change, if any, for the average [Prudential] doctor," says Kenneth Abramowitz, a health care analyst for Sandford Bernstein in New York City. After Schulman’s arrival, Prudential will begin to sell HMO operations that are not doing well in their markets, he predicts. Doctors who are in markets where Prudential has a poor market share will simply find themselves working for someone else.
The company will consolidate its billing, eligibility, and claims processing operations and may move into a client-team approach to these administrative functions, says Heine. These tasks that are now covered by 42 offices will soon be run out of four: Jacksonville, FL; Los Angeles; Houston; and Cranberry, NJ. "We have a non-standardized process now that is costing too much," Heine says. The new system will eliminate duplication, but also may result in service problems for providers, according to Winkenwerder.
"We have had some sizeable gaps in the accuracy and timing of payment," says Winkenwerder, whose employer has a Prudential contract. "These problems are directly related to the moving and consolidation of offices, but hopefully they can be ironed out," he says.
Too big to manage
"Prudential’s recent difficulties represent a much bigger problem in managed care today," says Winkenwerder. Companies like United, Oxford, and even Kaiser Permanente have roots in a local or regional market, he says. These companies started out with a focus on being a strong health maintenance organization, developed better information systems to track and manage costs, and then planned gradual expansion when they become more financially able to manage a larger operation.
National companies like Prudential are limited by their basic nature, say both Winkenwerder and Abramowitz. "Prudential Healthcare is operating well below its potential because it can’t execute the aggressive plans that will make them competitive," says Abramowitz. "The only way that I see it surviving is to split its health care operation off into a for-profit company. But I don’t think that is likely to happen."
Subscribe Now for Access
You have reached your article limit for the month. We hope you found our articles both enjoyable and insightful. For information on new subscriptions, product trials, alternative billing arrangements or group and site discounts please call 800-688-2421. We look forward to having you as a long-term member of the Relias Media community.