SYRACUSE - MVP Health Care (MVP), a Schenectady-based, healthbenefit provider covering 92,000 lives in Central New York alone, announced on March 31 that it was licensed to operate in the state of New Hampshire. MVP opened an office in Bedford, N.H. with six employees.
The expansion is the continuation of a strategy adopted by its first and current president and chief executive officer, David W. Oliker, who, on April 1, visited The Business Journal with his Chief Marketing Officer, Scott W. Averill. Both men participated in an interview with the editors of this publication to discuss industry trends and MVP's initiatives.
Oliker came to Schenectady County in 1982 at the behest of a group of physicians to form a health-maintenance organization (HMO) using private-practice physicians. In July 1983, the group launched a notfor-profit corporation, operating first in Schenectady and Saratoga Counties.
Oliker quips that subsequent growth into contiguous counties, the Hudson Valley, and the Southern Tier was not driven by a strategic plan: MVP simply waited for other physician groups to request help. That changed when the organization finally developed a strategic plan to expand in 1996 into Central New York and subsequently into Vermont and New Hampshire.
Steady growth
From the beginning, the MVP CEO called for 'steady growth, smart growth, profitable growth.' Oliker also insisted that if the organization didn't grow continually, 'it would not survive.' Historical benchmarks support his mantra. In 1983, MVP was 'delighted' to exceed its goal of 5,000 covered lives. By 1990, that number had jumped to 120,000 lives; in 1998, 330,000 covered lives; and at the end of Feb. 2005, 561,000 covered lives. Net worth shows a similar pattern: 1990, $5.3 million; 1998, $11.5 million; 2004, $146 million. Net income rose steadily from $3.8 million in 1990, to $4.1 million in 1998, to $15.3 million in 2004. Annual revenues are currently approaching $1 billion. This pattern of growth was disrupted only once, in 1997, when MVP, along with most managed-care companies, took a financial bath, losing $17.1 million and even dipping in enrollment.
MVP used the challenge as an opportunity to reinvent itself, speeding up the transformation from an HMO to a full-service, health-benefits company. The company added a preferred-provider organization and indemnity coverage. It also added Point of Service, custom options, and an exclusive-provider organization. In 2002, MVP Select Care, Inc., a for-profit corporation owned by MVP, bought Upstate Administrative Services, Inc. in Syracuse to offer third-party administration. The purchase was a strategic move by MVP to round out its third-party-administration marketing by adding smaller companies to the mix. Gary Hughes, the public-relations manager for MVP, says 'the acquisition was in line with MVP's efforts to reorganize by focusing on market segment by size rather than by region.'
Executive backgrounds
Oliker is a native of Auburn, N.Y. He received his undergraduate degree in sociology/anthropology from East Carolina University and his master's degree in social anthropology from The American University in Washington, D.C. He started his career with the central office of the United Mineworkers of America. His assignment was to contract with area medical-group practices in the coal fields. Oliker's contacts with health-care professionals led him to Rockville, Md., where he helped to create an HMO, and then to Schenectady, where he founded MVP Health Care.
Averill is a native of Exeter, N.H., who earned an M.B.A. from New Hampshire College and a master's degree from Pepperdine University. He spent most of his career with Blue Cross/Blue Shield of New Hampshire with a stint at the Health Alliance Plan, a subsidiary of the Henry Ford Health System in Detroit. Averill has spent more than 20 years as a marketing and sales executive in both group and individual health-care financing.
Oliker and Averill both agree that MVP's steady growth results first from listening carefully to consumers, providers, and employers. Second, MVP is large enough to offer a wide range of plans yet still small enough to react quickly to changes in the marketplace. Third, the organization constantly attacks costs. Oliker takes pride in citing that MVP's administrative costs are only 9 percent to 10.5 percent of revenues, whereas the industry hovers in the 11.5-percent range. Fourth, MVP leverages technology to identify patterns of care and to create predictive modeling. And fifth, MVP promotes innovation, such as its pay-for-performance program for medical providers.
Slow but steady has earned MVP recognition from its peers. Its healthcare plan has been rated by the National Committee for Quality Assurance among the top 10 in the nation for member satisfaction and rated number one for customer service in its service area by the New York State Health Accountability Foundation. In 2003, MVP was one of only two managed-care plans in the nation recognized in the National Exemplary Practice competition by the American Association of Health Plans. Weiss Ratings, Inc., a national, independent, ratings-and-analysis company, recently assigned MVP an A- for financial performance, reflecting '... excellent financial security ... [by] maintain[ing] a conservative stance in its investment strategies, business operations, and underwriting commitments.' Weiss placed MVP in 'an elite group of 88 HMOs [nationwide], representing the top 17.1 percent of the industry.'
When the subject turned to the rising cost of health care, Oliker responded immediately. 'Right now, there is ... a focus on the cost of health care and rightfully so. Employers are looking for any short-cut to get the costs down ... [which, too often] results in cost-shifting, not cost-savings ... There is no silver bullet.'
Averill says that 'MVP is jumping into the consumer-driven field of high-deductible plans' in response to employers trying to control costs. While Averill favors the consumer-driven concept, he warns that the corollary to high-deductible plans is 'transparency': Consumers must understand the plans and how to evaluate spending on health care.
Oliker is more skeptical; he says that injecting the consumer into the buying process to drive down costs is still just a theory. 'When you're sick, ... prices go out the window,' he says. Oliker adds that too many cost-drivers, like government mandates, advancing technology, and the demographics of the baby-boomer generation, are overwhelming the system despite efforts to contain costs. Oliker also contends that society may be focusing on the wrong issue cost-containment. Maybe the nation should accept that paying more for health care is a positive direction, yielding better quality and more access.
The Business Journal next asked whether the $40 billion spent to date complying with the Health Insurance Portability and Accountability Act (HIPAA) was a good investment. Oliker, responded that 'the community coding has been helpful, ... but generally speaking, the nation hasn't seen a return yet on its investment.' He goes on to say that privacy under HIPAA - when carried to excess - defies common sense.
When questioned about competing with an 800-pound gorilla like Blue Cross/Blue Shield, both men smile. 'I'll take our brand over The Blues,' responds Oliker. Averill cites the new 'IBM contract won by MVP, covering 50,000 lives in New York and Vermont,' as evidence that the company can compete not just for local accounts but also for national accounts. Oliker looks back on his entry into Central New York and opines that 'Syracuse needs more competition.'
In the fable of the 'Tortoise and The Hare,' the hare decides to take a nap in the middle of the race, because he is so far ahead of the tortoise When the hare wakes up, the tortoise is already at the finish line. Neither Oliker nor Averill plans to nap as they plod on building the MVP brand slow but steady.
