Over the longer term, the network needs an HMO, or similar insurance company, so that it can compete successfully under the proposed Clinton health reforms, health analysts said.
Those reforms call for insurers and large health networks like the Allegheny-Hahnemann group to bid for the right to provide cradle-to-grave health services to employees and other consumers.
An insurance vehicle is an integral part of such networks, the analysts said. Otherwise, the networks have no way of insuring themselves against the
financial risks of providing those services to their members. An HMO is both an insurance company and a provider, steering subscribers to its own network of hospitals and doctors.
"You need the insurance company to control your own destiny," said one industry source. "Without it, you only have half of the equation. You're left to sell your services to other insurers."
Following its merger with Hahnemann, the Allegheny network has a formidable presence in the Philadelphia region. It includes: two university teaching hospitals, two medical schools, a children's hospital, two community hospitals and a variety of other health-care businesses. Overall, the network has $1.5 billion in assets.
With an HMO, executives would be able to market this network to employers and consumers, competing against Independence Blue Cross, U.S. Healthcare, Graduate Health System and, eventually, other, larger hospital networks.
"In the future, everyone is going to belong to some form of a network," an industry source said. "That's the name of the game."
The sources said Allegheny president Sherif Abdelhak wants to start an HMO as "expeditiously as possible."
In keeping with that goal, he and other Allegheny representatives flew to Harrisburg on Tuesday to meet with officials from the state Departments of Health and Insurance. During those meetings, Abdelhak reportedly explained that he wanted to use the HMO initially to insure the network's own employees.
A representative of the Health Department declined to comment. An official
from the Insurance Department confirmed the meeting but described it as very general. "They were making sure what the ground rules were for starting an HMO," Deputy Insurance Commissioner Eric Brenner said.