NevadaCare purchases Humana unit in Nevada

Humana Inc. reduced its Nevada presence further Thursday, announcing a deal to sell off its health maintenance organization business in Nevada to NevadaCare Inc.

The HMO currently has about 4,700 members in the state. The deal will increase NevadaCare's membership by about 10 percent, to 53,000, making it the state's third-largest HMO. Financial terms were not disclosed.

"With such a small membership, it was really difficult to produce any kind of economies of scale, both in administrative costs and in building an adequate provider network," said Ross McLerran, spokesman for Humana.

The deal will not affect Humana's preferred provider organization business, which currently has 13,000 Nevada members. Nor will it affect the company's workers' compensation business, McLerran said.

"We're fully committed to servicing and marketing our existing PPO business in Las Vegas, as well as the workers' compensation business," McLerran said.

The deal must be approved by the Nevada Division of Insurance. It is expected to close by the end of March.

Humana has been cutting its Nevada operations since the middle of last year, as it focuses on improving its profitability. In July, it announced it was dropping its Gold Plus Medicare HMO plan, which had 10,000 members. The plan was discontinued Dec. 31.

Earlier this week, the company said it was selling off its supplemental Medicare insurance business to United Teachers Associates Insurance Co. of Austin, Texas. That move affected 820 Nevada policyholders.

Humana's decision to end the Medicare HMO made the sale of its remaining HMO operations inevitable, said NevadaCare President Keith Beagle.

"What was left (after Gold Plus) was essentially a small commercial population, which had dwindled over the years," Beagle said. "From a commercial HMO perspective, a lot of discounts are volume-driven. You can't drive enough volume to hospitals or providers to get better discounts.

"(The Humana HMO) is a good business, so that was attractive to us. We can absorb these 5,000 members with little additional fixed cost."

Beagle said the switch from Humana to NevadaCare would be relatively seamless for customers. There will be little change in providers available to customers, since virtually all of the HMO's physicians are also in the NevadaCare plan. NevadaCare has 2,800 physicians in its Nevada network, as opposed to 850 in the Humana network.

"(Customers') premiums will remain the same ... we'll accept whatever Humana is charging," Beagle said.

NevadaCare intends to continue growing in Nevada, partly through more acquisition opportunities, Beagle said.

"Like Sierra (Health Services), we're a Nevada corporation, so I think we can be much more responsive," he said. "The number of HMOs has dwindled to the point where there's not a whole lot of them left. Competition's always good, but it gives those who remain an opportunity to increase their leverage and volume."

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