Health Net 2001 Annual Report Download - page 9

DENTAL AND VISION. We acquired DentiCare of California, Inc. (‘‘DentiCare’’) (which is in
the process of changing its name to Health Net Dental, Inc.) in 1991. DentiCare provides dental care
services under an HMO arrangement in California and Hawaii and performs dental administration
services for an affiliate company in California. For the year ended December 31, 2001, DentiCare’s
total revenues were $49 million for services it provided for approximately 478,000 members, of which
72,600 members were beneficiaries under the Medicaid dental programs. DentiCare also participates in
the Healthy Families program, under which it serves approximately 89,600 members.
We provide at-risk vision care services and administrative services under various programs through
our wholly owned subsidiary Foundation Health Vision Services, Inc. d.b.a. AVP Vision Plans (‘‘AVP’’)
(which is in the process of changing its name to Health Net Vision, Inc.). AVP operates in California
and Arizona and shares a common administrative and information systems platform with DentiCare.
For the year ended December 31, 2001, total revenues were $9 million. The total number of lives
covered under these services reached approximately 505,000 members as of December 31, 2001. Of
those covered lives, 380,400 members are enrolled in full-risk products and 124,600 lives were covered
under administrative services contracts.
Both DentiCare and AVP are licensed in California under the Knox-Keene Health Care Service
Plan Act of 1975, as amended (the ‘‘Knox-Keene Act’’), as Specialized Health Care Service Plans, and
compete with other HMOs, traditional insurance companies, self-funded plans, PPOs and discounted
fee-for-service plans. The two companies share a common strategy to maximize the value and quality of
managed dental and vision care services while appropriately balancing financial risk assumption among
providers, members, and other entities to achieve the effective and efficient use of available resources.
BEHAVIORAL HEALTH. We provide behavioral health services through a subsidiary, Managed
Health Network, Inc., and subsidiaries of Managed Health Network, Inc. (collectively ‘‘MHN’’). MHN
holds a license in California under the Knox-Keene Act as a Specialized Health Care Service Plan.
MHN offers behavioral health, substance abuse and employee assistance programs on an insured and
self-funded basis to employers, governmental entities and other payors in various states.
MHN provides managed behavioral health programs to employers, governmental agencies and
public entitlement programs, such as TRICARE and Medicare. Employers participating in MHN’s
programs range in size from Fortune 100 companies to mid-sized companies with 200 employees.
MHN’s strategy is to extend its market share in the Fortune 500, health plan and TRICARE markets
through a combination of direct, consultant/broker and affiliate sales. MHN intends to achieve
additional market share through broadening its employer products, including using the Internet as a
distribution channel, pursuing upcoming TRICARE procurement opportunities with Federal Services
and continuing carve-out product sales, funded on either a risk or ASO, basis.
MHN’s products and services were being provided to over 10.4 million individuals as of
December 31, 2001, with approximately 3.2 million individuals under risk-based programs,
approximately 3.6 million individuals under self-funded programs and approximately 3.6 million
individuals under employee assistance programs (‘‘EAPs’’).
For the year ended December 31, 2001, these products and services generated revenues of
approximately $248 million, of which approximately $156 million derived from risk-based programs,
including approximately $25 million derived from TRICARE, approximately $26 million derived from
ASO programs and approximately $41 million derived from EAPs.
MHN has approximately 1,200 full-time equivalent employees serving approximately 2,100
employer groups on a stand alone basis plus approximately 34,000 groups through other affiliates of
ours, primarily in California and the Northeast.
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