HealthCare Oklahoma to cease operations in March

Wednesday, October 3rd 2001, 12:00 am
By: News On 6

OKLAHOMA CITY (AP) _ Oklahoma's third-largest commercial health maintenance organization will cease operations in 2002 after efforts to become self-sufficient failed, officials announced Tuesday.

WellCor America's HMO, HealthCare Oklahoma, will shut down by March 31. The HMO provides health care benefits to more than 55,000 Oklahomans, including many state and federal employees.

WellCor's Medicare-plus HMO, Perfect Harmony, also will cease to exist by March 31 and already has halted new enrollments. Perfect Harmony supplements Medicare coverage for more than 2,600 Oklahomans.

WellCor HMO members can expect a smooth transition to new providers _ including alternative HMOs, state Health Department officials said. The department regulates Oklahoma's 10 HMOs and will supervise WellCor's exit from the market.

``We've seen this happen before,'' said Henry Hartsell, chief of health resources development for the Health Department. ``Four HMOs went out of business in 1988, and two went out of business in 1999. Overall, during any of those years, there was not a significant reduction in total HMO enrollment. Most (members) were able to find coverage in other HMOs.''

But HealthCare Oklahoma members may find that coverage in other systems is more expensive. WellCor Chairman Stanley Hupfeld said HMOs have tried to provide affordable coverage to customers who want a broader range of benefits.

``People have become less tolerant of the restrictions that HMOs imply. They want more freedom,'' Hupfeld said. ``But with absolute freedom comes costs. There will be tremendously increased health premiums.''

HealthCare Oklahoma has tried since 1994 to become self-sufficient. Capital infusions from its largest shareholders have helped it stay solvent recently. Those shareholders include Integris Health, which owns a 63-percent stake in the company, Mercy Health System of Oklahoma and individual physicians.

Hupfeld said HealthCare Oklahoma's founders _ including himself _ believe the HMO was a worthwhile venture.

``We didn't go into this for any kind of profit,'' said Hupfeld, who also serves as president and chief executive of Integris. ``We did it to bring some sense of equality to the market so that physicians, hospitals and patients would not be abused by publicly traded HMOs.''

Weiss Ratings Inc., an independent organization that tracks the financial strength of more than 700 HMOs, gave HealthCare Oklahoma its lowest rating _ an E-minus _ this summer and counted it among the five weakest HMOs in the nation.

Donna O'Rourke, a financial analyst for Weiss, attributed HealthCare Oklahoma's low score to $5.3 million in negative capital and a $9.2 million loss last year.

Coverage for HealthCare Oklahoma members will continue until the company shuts its doors, Health Department officials said.

In the meantime, other HMOs must offer a 30-day enrollment period to members faced with losing coverage, the officials said.

WellCor will cease operations along with its two HMOs in March.

The company sold its preferred provider organization, known as the Sooner Health Plan, to another Oklahoma City company earlier this year.