Aligned

It was prompted by a “scale” issue.

“To effectively compete in the health insurance and benefits industry, you really have to have sufficient scale,” says Gary Shearer, president and CEO of Physicians Health Plan of Northern Indiana, or PHP. “A few recent studies have indicated that a health plan needs 700,000-1,000,000 members over which to spread administrative costs and risk. PHP is small — we only have about 50,000 members. This was creating excessive risk and negatively impacting our ability to price products to effectively compete with bigger companies.”

Shearer and the PHP board worked diligently to find a solution for the Fort Wayne-headquartered commercial health plan company that was established in 1983.

Both Shearer and the board focused on the importance of finding a like-minded partner in the health insurance and benefits industry. Priority Health was the clear choice.

“We’re very much like PHP in that we’re a local, nonprofit community organization that shares PHP’s commitment to provide affordable coverage for employees and members with the focus on whole health, high-quality care and exceptional membership experience,” says Praveen Thadani, president of Priority Health. “In terms of scale, we are the second largest health plan in Michigan and the third largest provider sponsored health plan in the country with more than 1.3 million members.”

The acquisition is expected to be completed before the end of the year.

Shearer does not anticipate PHP members noticing any changes for the remainder of this year or even well into next year.

“During that time, we’ll definitely be working with Priority Health to do evaluations on staffing models, our systems and really look for ways to find efficiencies, which was the driving force behind this partnership,” says Shearer. “Following the completion of the acquisition, PHP will continue to operate as a stand-alone subsidiary of Priority Health.”

Shearer also says PHP’s headquarters office on Illinois Road in southwest Fort Wayne will remain at that location at least through the end of the current lease, which expires in 2028.

Both Shearer and Thadani recognize that health insurance is a very personal matter and understand members will have concerns and questions.

“One of the most common questions has been, ‘Can I keep my current doctor?’ The answer is, ‘yes,’” says Shearer. “Right now, there won’t be any changes to networks, but, in my point of view, the networks will be enhanced over time. The neat thing about Priority Health that is different from PHP is that it’s in all business lines of the health insurance space. So, while PHP is only in the commercial and employer group space, Priority is also in Medicaid, Medicare Advantage and individual markets. If Priority has intentions to expand into any of these product lines, that opens up additional opportunities for PHP team members, area employers and individuals here in Indiana.”

In the 41 years since PHP first began operations in Fort Wayne, the company has been embraced by the community for its leadership and sponsorship of numerous nonprofits and events. In particular, the PHP Foundation, which focuses on access to health care for the uninsured and underinsured.

“PHP Foundation will continue to operate, but it’s going to operate in a much bigger and more impactful way going forward,” says Shearer. “The net proceeds of the transaction will benefit the PHP Foundation. We anticipate that once the foundation is fully funded through the transaction, the annual grants from the foundation will increase 5-6 times that of our current grant levels. That means the annual distribution range will go from about $500,000 to about $2.5 to $3 million. So, there’s going to be a substantial impact on the heath and well-being of the northern Indiana communities we serve and we’re really excited about the legacy that PHP is able to leave for this area.”

“I really appreciate the focus on the health care needs of the uninsured and underinsured,” says Thadani. “Priority Health is the first company in the state of Michigan to offer free virtual care to the uninsured through the end of this year. When you think about the alignment between our companies, and our mission/vision/values and our service to the community, those are the factors that brought us together right from the beginning. This will be a solid and perfect partnership in the future.” 

Physicians Health Plan of Northern Indiana, Inc. (PHP)
1700 Magnavox Way, #201
Fort Wayne, Indiana 46804
(260) 432-6690
phpni.com
Gary Shearer, President & CEO

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