Breaking the monopoly: Previous attempts failed - Birmingham Business Journal:

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, , and made attempts in the 1990s to set up theit own healthinsurance programs, but the companieds found it hard to break stronghold on the state health insurances industry, saying their efforts were undermined by swift reactionm by BlueCross and consumer apathy. Consumers, they were pleased with BCBS’ service and reluctant to leavd a company they liked forunknownj commodities, industry experts said. When UAB gave it a try in the late the state’s largest employer with more than 20,00p employees figured it had a significant client base that wouldc prefer to use the university’s facilities, accordingf to former UAB Public Healt h Professor Eric Ford.
Ford said UAB’s plan offerex cheaper premium rates than BCBS but overestimated employee participation and enthusiasnm for anew “The consumers liked having said Ford, now a health care managementr professor. “UAB tried. They thoughtf they had a large enougg employee base to put into the system and most employeesz would prefer to usetheir Today, BCBS holds an estimated 90 percenr commercial health insurance market share acros the state. UAB’s efforts to grab a portionj of BCBS’ market share failed, but it stilll operates an HMO known as VivaHealtyh Inc. Viva’s 2007 revenues totaled just $332.
3 according to financial filings available from theNationalo Assoc-iation of . In 2007, BCBS of Alabama reportef $3.5 billion in tota revenue. It reported net incomr of $71.6 million that year. In the was formed by the CEOs of severaklmajor corporations, including Alabama Power, Drummond Co. and SouthTrust The council solicited health insurance proposals and receives bids from ofAlabamwa Inc. and of Alabama, the formedr insurance arm of .
When BCBS learned the council wasmovinh forward, it offered the council a 20 percen discount in their current rateds for three years and they However, Drummond filed a lawsuit at the turn of the millennium claiming BCBS failed to deliver promised Drummond reached an undisclosed out-of-court settlement. One changde that did surface from the incidentg was eliminatingthe “favored nation” provisioh BCBS included in contract. A source familia r with BCBS’ contracts said that provision forced providerw contracted with BCBS to notify the insurer if they were negotiatingf with another firm and give BCBS a chance to undercutg thethird party’s offer.
BCBS denied it require d notification or a chance to offer a better deal andsaid “thde so-called Most Favored Natioh clauses were removed from our contracts in in a written United and Viva remain options in United reported $384.5 million in total revenur and $58 million in net income in 2007. UAB publi c health professor Mike Morriseyattributed BCBS’ market share dominancde to a lack of interest by competitors to entef Alabama. He said in the 1980s, at the height of the HMO Alabama didn’t fit the demographics national firms werelookin for. HMOs managed businessex with largeemployee bases.
“That has to do with the fact we had so many smalpl businesses and not so manybig corporations,” Morrisey said. Despite BCBS’ market Morrisey said there are opportunities for other national carriers toented Alabama. Self-insured administration operations could be competitivw for a company willingto try. “It’s a lot easiert to get into the administrative servicees than it is to enter asa full-blown insurer,” Morrisey said.