For all the interest among employers in health savings accounts and high-deductible plans, PacifiCare Health Systems Inc. sees individuals,rather than groups,as the prime users of two plans due out early next year.
Brad Bowlus, president of the Cypress-based company’s health plan division, appeared at the CIBC World Markets Healthcare Conference earlier this month in New York to talk about growth prospects. Among them: new health plans paired with health savings accounts created from last year’s sweeping Medicare reform.
PacifiCare doesn’t expect early success with small group employers because they may be reluctant to put funds in a health savings account that can be taken out for non-healthcare expenses at a 10% penalty, according to Bowlus.
Health savings account advocates tout them as a way to help businesses, particularly smaller ones, provide health benefits to their workers.
Critics argue that the accounts could lead to fragmentation within the health insurance pool. Healthy, affluent workers might choose the accounts while sicker workers remain stuck with existing coverage because high deductibles make the plans unattractive, the theory goes.
Besides health savings accounts, Bowlus also talked about PacifiCare’s plans for overall profit and growth.
PacifiCare, which now has about 3 million members, is going to grow its non-Medicare business by focusing on small group and individual health plans.
The company also is looking to grow niche businesses, including its Santa Ana-based PacifiCare Behavioral Health unit, which offers plans for mental healthcare, and Prescription Solutions, a Costa Mesa-based pharmacy that supplies prescriptions to PacifiCare members and others.
The Blade Issue
As Santa Ana-based Advanced Medical Optics Inc. moves along with its $1.3 billion buy of Santa Clara’s Visx Inc., Chief Executive James Mazzo said he’s not worried about a small part of his business: microkeratomes.
Those are metal blades used to cut a flap in a patient’s cornea as the first step in laser eye surgery.
Earlier this month, Robert Palmisano, chief executive of Irvine-based IntraLase Corp., hinted that microkeratomes were an “antiquated technology” and that his company, which makes lasers for corneal flap cutting, aims to take market share from microkeratome makers.
Mazzo, shortly after buy of laser maker Visx was announced, said he wasn’t threatened by predictions of disappearing blades.
“By no means,” Mazzo said. “In fact, if anything, I just enhanced my availability. Mechanical microkeratomes still are the No. 1 recommended for Lasik procedures.”
The Visx buy gives Advanced Medical more opportunities for selling the blades, Mazzo said.
Michael Lachman, managing director and medical device analyst for ThinkEquity Partners, a San Francisco-based investment bank, also downplayed the microkeratome issue.
Lachman said that Mazzo told him a few weeks ago that if microkeratomes disappeared from Advanced Medical’s product line, “We wouldn’t see it in the numbers.”
“It’s a very small product for them,” Lachman said. “But strategically it’s important because it’s gotten them into the (refractive surgery) field.”
Quality Systems Win
WR Hambrecht & Co., the San Francisco-based investment bank, likes Irvine-based Quality Systems Inc., thanks to moves by more doctors to adopt electronic medical records systems.
Sean Wieland, a Hambrecht analyst, reiterated a “buy” rating on the company and set a 12-month price target of $65 a share. Quality’s stock has boomeranged for most of the year in a range of roughly $39 to $61 a share.
Wieland wrote his move came about because NextGen, Quality Systems’ electronic medical records product, was awarded “vendor of choice” status by Hill Physicians Medical Group, which has more than 2,000 doctors in Northern California.
Quality beat out rivals Allscripts Healthcare Solutions of Libertyville, Ill., and GE Centricity, a unit of General Electric Co.
“We estimate the total size of the deal to be in the seven-figure range, compared to an average deal size of $250,000,” Wieland said in his report.
The analyst said that Hill Physicians felt that electronic medical records was critical to its ability to attract and retain patients, mentioning that it operates in a competitive healthcare market with Sutter Health, a Sacramento-based integrated delivery system, and Oakland-based Kaiser Permanente.
Bits and Pieces:
South Coast Medical Center, Laguna Beach, appointed Karolyn Schenemen as vice president of patient care services and chief nursing officer. Schenemen previously was the hospital’s executive director of cardiac services. She replaces Kevin Roberts, who is becoming president and chief executive of Castle Medical Center in Kailua, Hawaii The Healthcare Businesswomen’s Association launched its Southern California affiliate earlier this month with a program at Edwards Lifesciences Corp., Irvine. The association, which is based in Fairfield, N.J. and was founded in 1979, is dedicated to advance the careers of women in the healthcare industry.
