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March 30, 1995

HealthAmerica, Blue Cross officials react to decision on health insurance

Blue Cross of Western Pennsylvania issued a brief written statement following Chancellor J. Dennis O'Connor's announcement that Pitt will give Blue Cross exclusive rights to employee medical coverage here.

Officials from HealthAmerica, which will be eliminated under the Blue Cross agreement, condemned the deal. They said the Pitt administration never seriously considered their bids and that the University's decision was dictated by "a few administrators" at the University of Pittsburgh Medical Center (UPMC).

The statement from Blue Cross spokesperson Diane Wuycheck read: "Our proposal to the University of Pittsburgh was part of a highly competitive bidding process and tough negotiations.

"We believe the savings proposed can be achieved. When you are dealing with an account of this size you literally can't afford to quote a price you can't deliver." While details of the Pitt-Blue Cross deal haven't been finalized yet, O'Connor and Blue Cross officials say it will save the University at least $5 million over the next three years. HealthAmerica officials and some Pitt faculty and staff members dispute that claim. (See story beginning on page 1.) Other than issuing the written statement, Blue Cross officials declined to comment.

Mike Blackwood, president and chief executive officer of HealthAmerica, said he believes his company never got a fair hearing from Pitt senior administrators.

According to Blackwood, the University's Human Resources office and Pitt faculty and staff groups "were very objective, asked for a lot of details from us and gave us a fair shot. But we knew all along that we needed to get to the real decision-makers in the senior administration. As far as I'm concerned, if the chancellor had been serious about reviewing our proposals he would have called me up or called our marketing director to try to work out something. But all he did was take all the recommendations from the faculty and staff and summarily ignore them." In contrast, Blue Cross officials had access to the senior administration through Blue Cross's close relationship with UPMC leaders, Blackwood claimed.

Blackwood said he was warned last fall by sources he described as being "very familiar" with the negotiations among Pitt, Blue Cross and HealthAmerica that his company didn't stand much of a chance in competing for the University's business. Blackwood said: "I was told, and I firmly believe, that the UPMC was determined to form a partnership with Blue Cross because they (the medical center) figured they could attract some more patients their way. And UPMC calls the shots at Pitt" — a claim that Pitt administrators vehemently denied at the March 29 University Senate meeting. (See related story this issue.)

In a written statement to the news media, HealthAmerica called O'Connor's decision "a tragic loss" for Pitt faculty and staff "and for those who hoped and still believed that meaningful health care reform can be achieved by free market forces." The statement continued, "This is truly a 'political' decision, driven by the wishes of a few administrators at UPMC, who control many of the 'purse strings' at the University. A lot of University families will get caught in that back-wash." The statement claimed that HealthAmerica "matched Blue Cross's offer in terms of the financial impact on the University of Pittsburgh. Unlike our competitor, we were willing to co-exist with any set of insurance options which would be fairly administered. The 'savings' Pitt will receive surely would not have been put on the table if HealthAmerica were not the competitive force that it is. Will Pitt end up paying more later? When has an insurance monopoly served the needs of those receiving the product? The monopolist eventually becomes complacent and insulated." Pitt's 5,100 HealthAmerica enrollees represent a small percentage of the company's 250,000 western Pennsylvania members and "a little over 1 percent" of HealthAmerica's state-wide membership, Blackwood said. HealthAmerica will absorb the loss of its Pitt members and continue its "strong pattern of growth within the tri-state area," he said.

— Bruce Steele


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