Facing stiff competition for customers in Maryland, Rockville-based Mid Atlantic Medical Services Inc. announced yesterday it has begun selling HMO services in North Carolina.
"North Carolina represents a natural geographic expansion for MAMSI," said George T. Jochum, chairman, president and CEO. "And with HMO penetration of the state still relatively low -- less than 10 percent -- it is also an opportunity for us to greatly expand our membership base."
The company reports it has 1.35 million subscribers in Maryland, Virginia, West Virginia, the District of Columbia and Delaware. It is planning to expand into Pennsylvania.
Analysts said the move into North Carolina makes obvious sense.
"They have to, they don't have much of a choice," said Kurt Funderburg, with Ferris, Baker Watts Inc. in Baltimore. "The Maryland market is not saturated, but the penetration rate is among the highest in the country."
As many as 37 percent of Marylanders are enrolled in HMOs, according to industry estimates.
Mid Atlantic's North Carolina announcement gave the company something positive to talk about on a day when Wall Street was digesting news about recent insider sales of stock. Several officials sold more than 100,000 shares between late May and mid-June -- a period when the company, but not the public, knew Mid Atlantic had failed to obtain national accreditation.
The National Committee for Quality Assurance, which accredits HMOs on the basis of quality standards, privately informed the company of the rejection at the end of February and rejected a Mid Atlantic appeal at the end of May.
But the news didn't become public until June 15 when the Washington Post reported it. The stock fell $2, to $21, on the heels of that disclosure. The stock closed yesterday at $17.37, down 37 cents.