Queen’s completes
exit of insurance business

The sale of Queen's Health
Management gets finalized

By Lyn Danninger

Queen's Health Systems said yesterday it has finalized the sale of its remaining third-party administration health insurance business to a Glendale, Calif.-based company.

Queen's Medical Center The transaction completes Queen's exit from the health insurance business.

Terms of the sale of Queen's Health Management to Cyber-Pro Systems Inc., which operates under the name Medical Data Exchange Corp., were not made public.

Medical Data Exchange said it plans to retain the 19 Queen's Health Management employees to provide services for the 28,000 people currently covered under third-party contracts.

Third-party administrators contract to process medical claims for insurers or self-insured businesses.

"We are excited that rather than shifting operations to the mainland, we are instead focusing on expanding the business and staffing here in Hawaii," said Gerry Ibanez, chief financial officer for Medical Data Exchange.

Medical Data Exchange Corp., founded in 1984, specializes in developing and maintaining information technology systems designed for the health care market.

Apart from growing its third-party administration business here, Medical Data Exchange will also likely introduce other health-care business products in Hawaii, such as a compliance system to meet federal requirements for patient privacy and medical record security.

As part of its plan to quit the health insurance business, Queen's last month gradually began laying off the remaining 50 employees connected with its Quest health insurance. The company announced earlier this year that it did not intend to submit a bid for the state Medicaid business.

The Quest contract expired June 30 but layoffs connected with it will continue until about December when the company completes its contractual obligations, QHM President Paul Yamashita said.

Earlier, in June 2001, Queen's completed a deal to sell its Tricare subsidiary, which held contracts to serve 90,000 military families and retirees in Hawaii. That plan was sold to Health Net Federal Systems Inc., a managed care health insurer previously subcontracted with Queen's to process claims. About 50 Queen's employees transferred to Health Net with the sale.

In 2001, Queen's divested itself of its other health plan businesses, Queen's Island Care and Queen's Preferred Plan to local insurer University Health Alliance.

The move by Queen's to exit the health insurance business began in 1999. At the time, the company said it wanted to focus on its core business of direct patient care.

The latest sale also ensures the continuation of Queen's existing physician and hospital network, which was created to serve members associated with Queen's third party-administration business and health plans.

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