Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, May 4, 1995 TAG: 9505040124
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: SANDRA BROWN KELLY STAFF WRITER
DATELINE: LENGTH: Medium
Wednesday, the Medical Society of Virginia announced it was joining with PHP Inc., a North Carolina managed health care company, to establish PHP Virginia Inc., which would have offices in Richmond and Roanoke.
Letters have been mailed to the state's 14,000 physicians asking them to let the Medical Society know by June 14 if they are interested in receiving a prospectus on the project.
To start, the Medical Society wants a minimum $6 million to $7 million investment, said Marshall Cook, its general counsel. Only half of that needs to be raised from doctors, however, because PHP has agreed to match the physicians' investment.
Shares are expected to sell for approximately $1,500, with a two-share minimum purchase required for all but primary care physicians.
Primary care physicians can get in for one share because they are needed in any network that wants to sell managed care, said Dr. Chris Alexander of Roanoke, who served on the HMO steering committee.
Although the project can't be launched until physician response is gauged, everyone expects it to be successful, Alexander said.
"It will require the willingness of physicians to contribute support financially and accept risk, but that's the name of the managed care," he said.
The Medical Society represents 6,500 Virginia doctors. More than a year ago, it commissioned a study to determine how interested doctors would be in having their own HMO, and thereby being able to play a greater role in setting the standards of health care delivery in their areas.
To save money, more companies are choosing health plans that require employees to seek care within a particular network of doctors and hospitals that have agreed to accept certain fees for their services. These networks generally are being established by insurance companies and hospitals, such as the Healthkeepers plan that Carilion Health System and Trigon Blue Cross Blue Shield have in the Roanoke Valley.
PHP would be in competition with the Carilion-Trigon HMO and with other companies planning to sell managed care in the area, such as John Deere Health Care Inc., a division of a manufacturing company.
Alexander doesn't see that as a problem.
"The competition might be with John Deere, or it might be that John Deere would want to work through this network to serve the whole state," he said.
Alexander expects PHP's history to be a big selling point. PHP, headquartered in Greensboro, N.C., has 114,000 customers and a network of more than 3,000 physicians. It opened a branch office in Raleigh this week and expects to open a branch in Charlotte, N.C., by January.
The company was started in 1985 as Physicians Health Plan, and doctors still own 50 percent of it. Other owners are Wesley Long Community Hospital and the Surgical Center in Greensboro.
PHP officials say the company's most successful plan is Open Access, which allows customers to see any doctor in the network without first receiving a referral from a primary care physician.
PHP, the second largest of North Carolina's 13 licensed HMOs, is on a "very aggressive track," said Roger Rollman, director of corporate communications.
PHP was rated first in a financial safety survey of North Carolina HMOs by Weiss Research Inc., a West Palm Beach, Fla., consumer-oriented rating agency. PHP got an A-minus, only two notches below Weiss' top rating of A-plus.
PHP reported 1993 revenue of $94.7 million and net income of $8 million, according to the state's Department of Insurance records.
by CNB