Managed-care company teams up with Hopkins

May 03, 1994|By Patricia Meisol | Patricia Meisol,Sun Staff Writer

Two giants of the medical care industry joined forces yesterday to expand their businesses and change the way health care is delivered in Maryland.

The Johns Hopkins Health System, the university's School of Medicine, and U.S. Healthcare Inc. signed a broad agreement to collaborate on ways to deliver health care.

In a key part, Hopkins said it would develop a network of providers -- doctors, hospitals and others -- to be used by U.S. Healthcare members in Maryland.

At the same time, Hopkins and the Blue Bell, Pa.-based #i managed-care company would collaborate on quality control measures and information systems that could be applied around the country.

The agreement comes as Johns Hopkins develops its own strategies to win managed-care business while U.S. Healthcare needs to expand more rapidly.

"It is more than just a health plan, but a way in which the two sides can work together," said Marshall V. Rozzi, executive vice president of U.S. Healthcare. U.S. Healthcare was working from the premise that "the best quality is often the lowest price," he said.

"When you do things right the first time, or get people to the right place first, it yields lower cost," Mr. Rozzi said, explaining the company's desire to work with Hopkins.

The marriage between Hopkins, one of the country's leading academic centers, and U.S. Healthcare, one of the largest managed-care companies, was primarily one of convenience.

Only a few years ago, doctors at Hopkins wouldn't have considered working with a managed-care company. Now they have contracts with at least half a dozen companies. And a few years ago, managed-care companies stayed away from partnerships with academic teaching hospitals because they were more expensive.

But as managed care becomes more prevalent and the quality of health care becomes a dominant measure in evaluating a health plan, both sides were finding they needed each other. U.S. Healthcare saw its stock drop 10 percent last week when membership growth for the quarter fell short of analysts' expectations.

In trading on the Nasdaq stock market yesterday, U.S. Healthcare closed at $39, up $1.50 a share.

Under the terms of the agreement, Hopkins would set up the health care network and provide the care. U.S. Healthcare would take the financial risk normally assumed by an insurance company. It could take a year or more to set up the network.

U.S. Healthcare is one of the largest and most profitable health care companies in the country. Its 1.6 million members are concentrated in New York, New Jersey and Pennsylvania. It entered Maryland in the fall of 1992 and, while relatively small here, is among the fastest growing managed-care companies in the state with more than 9,000 members.

The Johns Hopkins Health System includes the Johns Hopkins and Bayview hospitals and a separate corporation of nonfaculty doctors that provides health care on contract for members of Prudential Health Care Plan. It has 1,600 beds and employs 5,500 people. Earnings for the year ended June 30 were $836,700 on revenues of $701 million.

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