JOHNS HOPKINS TO SELL HMO Prudential to buy, run company; Hopkins to provide medical services.


The Johns Hopkins Health System has agreed to sell its health maintenance organization to Prudential Insurance, the nation's largest commercial health insurer.

Hopkins announced today it has signed a letter of intent with Prudential to sell the HMO for an undisclosed amount. Hopkins officials estimated it will take about three months to get the necessary regulatory approvals and then the HMO will change its name from the Johns Hopkins Health Plan to the Prudential Health Care Plan Inc., which trades as PruCare.

However, Hopkins has a 10-year agreement with Prudential to continue to provide the medical care to the 115,000 members of the HMO. There should be no layoffs or changes in service to the HMO members, Hopkins officials said.

The HMO has 80 locations in Maryland with 2,000 participating physicians. It had revenues of $95 million in the fiscal year that ended June 30.

Dr. Robert M. Heyssel, president of the health system and Hopkins Hospital, said the HMO is being sold because employers are requiring more insurance options from a single insurer.

"If the world looked today as it did in 1985, we wouldn't even look at this," he said.

Under the new arrangement, Prudential will be responsible for all the insurance functions, while Hopkins will coordinate medical service.

"Each will be doing what we do best," Heyssel said. "The only change will be in the name," he said.

The HMO has been profitable for the past two fiscal years and is expected to be profitable in the current fiscal year, Heyssel said. In the fiscal year that ended June 30, the HMO earned $2.5 million.

About 25,000 of the members of the John Hopkins HMO have their care paid for by Medicaid, the government medical program for low-income people. That service is to continue under Prudential.

Prudential, a mutual company based in Newark, N.J., is one of the largest insurance companies in the country and has extensive operations in financial services.

The new operation will absorb Prudential's existing HMO operation in Maryland, Washington and northern Virginia, which has 1,800 members, said Dennis R. Walsh, vice president in charge of Central Atlantic Group Operations for Prudential.

The company also has a managed care health plan in the Baltimore-Washington area called Prudential Plus that has about 100,000 members. In this plan, members can choose from a variety of doctors that are part of a network put together by Prudential.

Nationally, Prudential provides health insurance coverage to 20 million people. It is second only to the Blue Cross and Blue Shield system, which is non-profit, in health insurance coverage, Walsh said.

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