ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, April 25, 1996 TAG: 9604250037
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
DATELINE: RICHMOND
SOURCE: Associated Press
The head of Trigon Blue Cross Blue Shield told policyholders Wednesday that the insurance company faces a stark, simple choice - either be predator or prey in the changing health care industry.
Trigon Chairman and Chief Executive Officer Norwood H. Davis Jr. told about 150 policyholders at their annual meeting that the insurer needs to convert from a mutual company to a for-profit stock corporation that can compete on Wall Street for capital.
The Richmond-based company, the state's largest health insurer with 1.8 million customers, needs to raise money to remain strong, Davis said. Other Blue Cross Blue Shield plans have been forced to consolidate or merge with big, out-of-state insurers because they can no longer compete, he said.
There are 63 Blues in the country, and according to some estimates only five or six will be left by 2000, Davis said.
``The name of the game is you are a hunter or you are the hunted,'' he said. ``Trigon's intention is to survive and prosper and to build your company as an independent company in Virginia. We will be a hunter.''
The company is petitioning the State Corporation Commission to approve its conversion to a stock corporation. Two-thirds of the insurer's policyholders also must approve the change. Some consumer advocates worry that the quality of care would diminish if Trigon goes public.
The SCC will hold a public hearing later this year.
The insurer posted 1995 earnings of $47 million, compared with $93.3 million in 1994. Trigon attributed the drop to more competitive market conditions and to $47 million in refunds to customers who had been overcharged through a now-abandoned billing practice.
The company, whose billing practices were the subject of a state investigation in 1994, was said to have negotiated discounts with hospitals without passing the savings on to customers. The company was ordered to pay fines to state regulators and refunds to customers. No criminal charges were filed.
Eules Turner, of Stanley, a policyholder since 1969, asked Davis why five members of the board of directors were reappointed to additional three-year terms Wednesday, given that the multimillion dollar fines and refunds occurred during their watch.
Davis responded that all five are ``respected businessmen and women'' and are assets to the insurer.
Under an agreement reached with Attorney General Jim Gilmore last year, a for-profit Trigon would have to add two independent board members.
LENGTH: Medium: 55 lines ILLUSTRATION: PHOTO: FILE/1995. Trigon's offices in downtown Roanoke. color.by CNB