`A great run' at Spectera

David Hall retiring after 10 years at helm of vision and dental benefits company

February 23, 2007|By M. William Salganik | M. William Salganik,Sun reporter

Ten years ago, David T. Hall became chief executive officer of Spectera, a regional vision and dental benefits company that had been led for decades by its founder. It had revenue of $60 million a year, and provided benefits for 3 million people.

When Hall retires at the end of this month, he will be leaving a company - now known officially, if not mellifluously, as Spectera UnitedHealthcare Dental - that is now a division of the country's largest health insurer. It has annual revenue of $1.3 billion, and offers benefits to 24.5 million members.

Spectera's employment has grown from 665 to more than 1,500 nationally, including about 600 in Maryland, divided among the Woodlawn headquarters, an optical lab in the Holabird Industrial Park that turns out more than 2,000 pairs of glasses a day, United Optical retail stores and other offices.

"It's been a great run," Hall said this week.

At a time when employers are controlling costs by trimming health benefits, adding co-payments or raising deductibles, vision benefits have become more popular. One reason: Vision plans are low cost, compared with overall health benefits - in the range of $10 to $15 a month per person, according to benefits consultants - and the price has been relatively stable. Nearly half of the companies that offer them make them a "voluntary benefit," with the employee picking up the entire cost.

"A medium- or large-sized employer will say, `Why not? It will make our plan look better, especially since we just raised the deductible,' " said Michael Carter, a vice president in the benefits practice at the Philadelphia office of Hay Group, a national business consulting firm. Although vision is sometimes bundled with health coverage, most often companies such as Spectera make separate sales to employers, union benefit plans and government programs.

Hay Group's annual survey of medium and large employers shows 74 percent offered a vision benefit in 2006 - up from 57 percent five years earlier and 48 percent 10 years earlier.

(Small employers, who may not even offer health benefits, are much less likely than larger companies to have vision plans, but are underrepresented in the Hay survey.)

As vision benefits have grown more popular, Spectera has managed to grow even faster than its competitors.

The company that is now Spectera began with Dr. Oscar Camp, a Baltimore surgeon who served as a consultant to local unions. In 1962, he set up a vision program for the Seafarers International Union. Dental benefits were added later, and other unions and employers began to join. In 1964, the plan opened the first United Optical retail stores.

In the mid-1990s, it became an employee-owned company, and Camp, looking to take a less active role, became chairman. Hall, trained as a physicians' assistant and an employee since 1983, stepped up to CEO in 1997.

"We decided we wanted to go from a regional to a national company," Hall recounted. Over his first few years, Spectera sold off most of its dental and other programs, investing the money in expanding geographically by buying several vision plans, including one in California.

Bought in 2001

The goal, Hall said, was to build the revenue and footprint, then sell the company, allowing Camp to cash out his investment and retire.

By 2001, Spectera had roughly doubled its vision plan membership and revenue. UnitedHealth Group, the Minnesota-based health benefits giant, bought it that year for an undisclosed sum.

"United has, over the past several years, beyond big blockbuster deals, been out buying up ancillary providers like Spectera and smaller health plans and smaller health [information technology] companies," said Thomas A. Carroll, a health analyst in the Baltimore office of Stifel, Nicolaus & Co. Inc. "United is a company that wants to diversify across the entire spectrum of health services."

While United introduces a layer of corporate oversight, Carroll continues, "the subsidiary runs pretty much on its own."

While growth was strong in the five years under Hall before the United deal, it's accelerated in the five years since.

"United has helped them grow like crazy," said Reagan M. Crawford, founder and managing member of Crawford Advisors LLC, a Hunt Valley benefits management firm.

Helped by access to United's client base and with leads from United's sales force, Crawford said, Spectera has become firmly established as one of the top four vision plans in the country, along with industry leader VSP Vision Care, Davis Vision and Cole Vision.

United has acquired other vision and dental plans and put them under Spectera's control, adding to the membership.

While United has certainly helped, Hall said, much of Spectera's growth has come from an energetic sales force persuading more employers to offer eye coverage. "It was like unclaimed freight, because so many of them didn't have vision benefits," he said.

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