Definity Health announces major client
Glenn Howatt
Star Tribune
Published Nov 8 2001
Definity Health, based in St. Louis Park, has landed one of the
nation's largest and most influential health care purchasing
clients, the Pacific Business Group on Health (PBGH).
The California-based coalition includes 44 companies that
spend $3 billion each year on health care benefits for 3 million
employees and their families.
"Clearly we are pleased that they chose us," said Chris Delaney,
Definity's director of marketing. "This shows that the largest
and most significant business coalition has essentially endorsed
us."
The deal, to be announced today, is expected to provide
significant gains in revenue and membership -- as well as
visibility -- for three-year-old Definity Health, which offers a
health plan that it bills as an alternative to managed care.
Analysts expect the PBGH announcement to make other
companies take notice.
"This is another step in what appears to be momentum building
around the Definity model," said Ted Chien, lead health care
consultant for the Bloomington office of the Watson Wyatt
Worldwide consulting firm.
"This will have a lot of significance in how others adopt plans,"
said Chien. "Generally speaking, employers don't want to be
the first. The fact that they have the coalition, which is such a
large influencer in health care, is a big step."
PBGH officials said they chose Definity after a six-month
search, and they say its selection is a signal that they want to
see fundamental change in the health care market.
"We believe this selection ... will change the course of how
health care is delivered, not just in California but in the
country," said Peter Lee, chief executive of the coalition.
Each employer member of the coalition will decide whether to
offer Definity to its workers and how it will do that. Definity
will be marketed as the "Breakthrough Plan." The coalition
also will work with Definity to develop materials that will help
consumers evaluate the cost and quality of doctors and
hospitals in the Definity network.
Under the Definity plan, each member is responsible for paying
an annual deductible amount before the benefits kick in. But
employers give each member health care spending money,
typically one-half of the deductible.
In the plan for University of Minnesota, one of Definity's
newest clients, individuals can choose a $1,250 deductible and
$500 in their personal care account or a $2,000 deductible and
$1,000 in their account. Money in the account can used for
medical care, contact lenses, laser eye surgery, smoking
cessation and acupuncture, among other things.
Under all Definity plans, preventive care such as physical
exams, mammograms and cancer screening are fully paid by
insurance and do not come out of the member's pocket.
Definity does not require prior approval or referrals for any
procedures, and members can choose any doctor they want.
However, some criticize plans like Definity because people with
chronic illness usually have to spend up to the deductible
amount each year. People with no chronic illness usually do not
pay as much and, in fact, get to roll over any unused money to
the next year.
Definity counters the criticism by saying it will help those with
illnesses select providers and evaluate treatments.
"We think that costs can be controlled by greater consumer
involvement," Delaney said.
PBGH members include Bank of America, the California
Public Employees Retirement System, ChevronTexaco Corp.,
Pacific Gas & Electric Co. and the University of California.
The coalition is the latest of many new clients that have joined
Definity, which now has just 6,000 members in its plan. The
recent addition of the University of Minnesota and national
employers such as Charter Communications, Raytheon Co. and
Textron will give Definity 50,000 to 100,000 members as of
Jan. 1, depending on how many employees sign up for the plan.
-- Glenn Howatt is at howatt@startribune.com .
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