Pacifi Care Rapidly Launches
and Grows Consumer-Directed
C A S E S T U D Y
Late in 2001, Pacifi Care Health Systems, the largest purchaser of healthcare services
in the western United States, decided to change its business strategy. The company
wanted to proactively address the impact of rising healthcare costs on its HMO
program and the lower reimbursements from the federal government for its
Medicare +Choice program.
Adjusting to the business climate, Pacifi Care executives launched a new business
strategy that focused on stabilizing its core business, broadening its product and
service offering, and becoming a stronger consumer-oriented health organization.
This new strategy led to the creation of a new consumer-directed health plan product.
“We recognized the industry trend toward consumerism,” said Joseph E. Smith,
vice president of product development for Pacifi Care. “We saw that establishing
a consumer-directed offering was essential to achieving our consumer health
organization vision. We couldn’t do that under our previous model.” In addition to the
new benefi ts offering, Pacifi Care started to market tiered hospital and provider plans.
That tiered approach provides Pacifi Care members with more fl exibility and options
for healthcare while incorporating elements of consumer choice.
Although Pacifi Care performs claims processing and other back-offi ce related
services for its Health Plan and Senior Solutions division products, it didn’t have
experience with health reimbursement arrangement (HRA) administration. HRAs
are an integral part of consumer-directed health fi nancing arrangements, but can
be complex to administer. In an HRA, an employer contributes a fi xed dollar
amount that the employee can use to pay for health care. The HRA creates fi nancial
incentives for the employee to be a more prudent purchaser of health care, and
unused amounts can be r