Health Net 1998 Annual Report Download - page 14

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1 2 F O U N DAT IO N H EALT H SYST EMS, I N C.
W hat were the highlights of 1998?
The most significant highlight occurred during the middle of 1998 when our largest medical
group declared bankruptcy.As this crisis unfolded, we literally rolled up our sleeves and worked
day and night to ensure that our members had access to physicians and health care services.
Although almost half of our membership was affected,Intergroup lost very few members, and
with our help, 80% of the doctors were able to remain in our network under other arrangements.
This is a testament to how well our dedicated associates handled this very challenging situation.
From this event,however, we learned an important lesson:Stabilizing our physician and hospital
network is critical to Intergroup’s future.
How do medical groups fit with Intergroup’s future?
We believe the position of medical groups is waning in Arizona.Over the last few years, we’ve
seen several groups experience financial difficulties that put them out of business.
Intergroup has responded by taking back much of the financial risk and responsibilities we previ-
ously delegated to groups.Now Intergroup’s primary reimbursement model is based on contract-
ing directly with primary care physicians and specialists.We think this strategy makes the best sense
in light of our 1998 experiences and the evolving health care environment.
How is Intergroup preparing for future growth?
I n t e r group is well positioned for future grow t h .We have the staying powe r . Our name is we l l - k n ow n
throughout the state because we’ve been around for more than 17 years. Intergroup is financially
s t a ble and, u n l i ke some of our competitors , we did not underp rice our business to gain market share.
We also have a tremendous opportunity in Medicare. Our product is very popular with seniors
because we offer a strong benefit package that is based on sound economics.
Ed Munno
P resident and Chief Executive Officer
Arizona Division
Ed Munno joined an FHS predecessor company in 1991. Since then, he has moved quickly through the ranks,
and for the last four years, has overseen the operations of one of Arizona’s oldest and largest health plans.
Prior to his Arizona appointment in 1995, Ed had served in several executive positions with the predecessor
company’s California health plan.