Bigger pill
POSTED: Friday, February 12, 2010
The state's health insurance market is about to be reduced to four providers.
Less than five years after entering Hawaii, Las-Vegas based Summerlin Life and Health Insurance Co. said yesterday it has reached a definitive agreement to be acquired by the Hawaii Medical Assurance Association.
The deal, which has been approved by both boards but is still subject to regulatory approval, will nearly double the size of HMAA to about 48,000 members.
Summerlin, which entered the Hawaii market in 2004, has about 22,000 members.
“;This is a great acquisition for HMAA as our company begins its third decade of serving businesses and their employees across Hawaii,”; said John Henry Felix, HMAA's chairman, president and chief executive officer. “;HMAA prides itself on providing outstanding customer service, broad provider networks and innovative products. This move will provide both HMAA's and Summerlin's members with a wider choice of comprehensive benefit options that will help protect them and their families.”;
Terms of the deal were not disclosed.
The combination of the two companies would allow HMAA to leapfrog University Health Alliance to become the second-largest preferred-provider organization in the state behind the Hawaii Medical Service Association. Kaiser Permanente Hawaii, the state's second-largest overall health care provider, is the largest health maintenance organization.
HMAA had net income of $88,129 and revenue of $71 million through the first nine months of 2009, while Summerlin posted earnings of $437,737 with revenue of $49.9 million over the same period. Full-year numbers won't be available until about March 1.
State Insurance Commissioner J.P. Schmidt said his office had held discussions with HMAA and Summerlin over the past couple of months regarding the acquisition.
“;We will review this thoroughly and expeditiously because we know this has a very important impact on a lot of our Hawaii citizens,”; he said.
Summerlin CEO Paul Carter said the company decided to exit the health insurance market in Hawaii to focus on growing nationally its third-party administrative services business, which will remain in the state.
HMA Inc., an affiliate of Summerlin, will continue to market and service its existing Taft-Hartley Trust Fund clients and other large self-funded employee benefit health plans in Hawaii.
“;Summerlin's parent company continues to be focused on a clear and definable plan to nationally grow its significant third-party administration business, its provider networks and its information technology business,”; Carter said.
Schmidt said part of the challenge for Summerlin in Hawaii was that as a for-profit company it had to pay a state tax on its member dues, whereas its nonprofit competitors were exempt.
“;Although we'd like to see more companies providing health insurance here in Hawaii, we also want to make sure we have good, solid, financially strong companies,”; he said. “;I think based on the types of business that both HMAA and Summerlin do, I think this is a good fit and will result in a larger, stronger company. That may help provide more competition in the marketplace.”;
MEDICAL INSURERS IN HAWAII
| Headquarters | Founded | Members | Revenue * | |
| Hawaii Medical Assurance Association | Hawaii | 1989 | 26,000 | $71 million |
| Summerlin Life and Health Insurance | Las Vegas | 2004 | 22,000 | $49.9 million |
OTHER HAWAII INSURERS
| Headquarters | Founded | Members | Revenue * | |
| Hawaii Medical Service Associatiion | Hawaii | 1938 | 682,383 | $1.2 billion |
| Kaiser Permanente Hawaii | Hawaii | 1958 | 224,000 | $707.6 million |
| University Health Alliance | Hawaii | 1996 | 30,736 | $77.5 million |
* Nine-month revenue. Full-year revenue will not be available until about March 1.
Source: Individual insurers, state Insurance Division
