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Healthmarkets in the News

Date: August 27, 2007
Focusing in
Company finds its niche in health care

By KEN PARISH JENKINS

For all the changes at HealthMarkets Inc. the past two years, you'd never suspect president and CEO William Gedwed to recall a conversation he had in a Home Depot to put those changes in proper perspective. But he does, and it's a story he uses often because it fits well. It starts with Gedwed strolling through the home-supply store in Southlake wearing a golf shirt sporting his company's logo and ends with a gentleman stopping him to inquire about affordable coverage for the self-employed.

This never happened when Gedwed wore "UICI" on his shirt.

In fact, if anything, HealthMarkets' former name always prompted Gedwed to explain what the company was and what it did.

Changing a corporation's name won't solely catapult it to No. 1 status among the area's private companies. But in the case of HealthMarkets Inc., based in North Richland Hills, it was one of a number of pivotal decisions that gave the company a sharper focus and a more recognizable identity as it shifted from a public to private enterprise.

"We're more focused on our core assets and core knowledge base," said Gedwed, who took over as CEO in 2003. "Prior to me coming here, the company was more diversified than it is today. They had lines of business that weren't, I thought, critical to the long-term success of the company. I felt like we were in a business we really didn't understand."

In fact, in 2005, The National Association of Insurance Commissioners reviewed the operations of UICI subsidiaries Mega Life & Health Insurance Co., Mid-West National Life Insurance Co. of Tennessee and Chesapeake Life Insurance Co. because of its marketing tactics. Mega had been barred in Washington state from writing new business because its policies violated state law. The NAIC ended up scrutinizing UICI's market conduct in 24 states.

In rather short order, Gedwed sold off all its non-insurance operations to focus on the core business it knew best: health insurance and affordable health coverage.

Today, HealthMarkets has revenues totaling well over $2 billion. It offers an assortment of health care insurance products from major comprehensive to indemnity-based policies for working Americans who don't have ties to larger insurance companies. It appears that HealthMarkets is finding its niche in not only supplying insurance to the self-employed, hourly workers, small business owners and their employees but also in playing the role of advocate in pushing for consumers and providers to be more well-informed in the often puzzling world of health care.

"Health care is a very complex thing, especially for those who are self-employed and have to buy it themselves," Gedwed said. "Our goal is to focus on first making sure our customers are more savvy because they are doing the acquisition of the product line and are the ones who have to understand it. We've gotten to become more product-centric."

‘A better brand'
This is quite a leap from its beginnings in 1985 as United Insurance Cos. Inc., a firm that along with health and life insurance offered student loans and sub-prime credit card services. It went public in 1986 and 10 years later shortened its name to UICI while broadening its scope with a product-line expansion.

A year after Gedwed's arrival, UICI purchased the assets and technology of Connecticut-based HealthMarkets Inc., a pioneer in consumer-guided health care for small businesses and businesspeople. The change constituted a marriage of sales expertise and modern technology, dedicated to providing price transparency to consumers. (Members now benefit from a pricing breakdown of more than 20,000 procedures or services, from the cost of a routine office visit to a consultation by a specialist.)

Last year, the company was acquired by a group of private equity investors led by The Blackstone Group in a transaction reportedly valued at $1.7 billion.

As for the name change to the company it bought, it made perfect sense.

"I'd say I'm CEO for UICI, and they would ask, `What does that stand for?''' Gedwed said. "And I'd say, `Well, really, nothing.' HealthMarkets really provided us with a better brand of what we are and what we do everyday."

Now, HealthMarkets is positioning itself as a leader in the field. Gedwed has testified before the House Energy and Commerce Subcommittee on Health about the need for consumers to have more information. He believes patients must become savvy shoppers in the medical marketplace, to "be able to seek out heath care the way you seek out automobiles and big appliances," he said. "That information needs to be out there so they can determine what it will cost if you go to this doctor or this hospital. Why did this doctor charge me $4,000 for an MRI and over here I can get it for $1,000? We want to take the confusion out of health care."

Gedwed believes much of that confusion is due, in part, to consumers receiving health care through employer-based sponsored health programs and therefore not having a vested interest in the process.

His example is this: what would happen if he asks 100 of his own 2,500 employees to name the top five things they worry about?

"Health care wouldn't be No. 1, 2 or No. 5," Gedwed said. "It's not on their minds because it is supplied to them by our corporation and we pay 75 percent of the bill. But if you take five people who didn't get coverage through their employer or were self-employed and you ask them, ‘What's the No. 1 thing that keeps you awake at night?' I think a large percentage would say health care. What we're trying to do is create a better environment for the consumer, the provider and the payer. To all work together."

HealthMarkets isn't alone. Consumer-driven health plans are becoming part of health insurers' products across the country. Major insurance providers like Aetna, Cigna and UnitedHealth Group are now jumping on the individual health care bandwagon.

Gedwed isn't concerned.

"This isn't part time for us," Gedwed said. "We know the market, we know the consumer, we know what our customers need, based on our experience. We've been in this market a long, long time. It's what we do."