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The Honolulu Advertiser
Posted on: Friday, March 1, 2002

Kapi'olani, Queen's to close QUEST programs

By Frank Cho
Advertiser Staff Writer

Kapi'olani HealthHawaii and Queen's Health Management Corp., a subsidiary of the Queen's Health Systems, said they are closing their QUEST health plan programs, affecting health insurance coverage for nearly 40,000 Hawai'i residents.

Both companies said the QUEST program had not been profitable for them and they plan to refocus their efforts on their hospital services once their three-year QUEST contract ends June 30.

The decision will affect about 50 positions at Queen's and another 12 positions at Kapi'olani, according to company officials.

"This has not been an easy task, and we are deeply appreciative of our employees for their continuing dedication, perseverance and hard work," said Paul Yamashita, president of Queen's Health Management.

Plan members should expect no changes to their plan benefits through the end of June.

The decision to close both programs, however, will mean that QUEST members will have fewer choices in May when they may choose a provider for the new plan year. During the late 1990s, six Hawai'i-based insurers provided insurance coverage to QUEST members. But only three companies decided to submit a bid last month to renew their contracts.

Although the number of providers will be cut in half, services are expected to remain at the same level for the 125,000 QUEST members, said Susan Chandler, state Department of Human Services director. She said there will be an open enrollment period in May when members will be able to select a new plan or keep their existing plan with those companies that have chosen to continue with the program.

Kaiser Permanente, Hawaii Medical Service Association and AlohaCare will continue to participate in the program; Queen's, Kapi'olani and Straub chose not to submit bids and will be out of the program by the end of June.

In 1999, both Kapi'olani and Queen's announced their intention of getting out of the health insurance business, citing rising costs and difficulty competing with larger insurance providers such as Kaiser Permanente and HMSA.

Kapi'olani president David Heywood said Kapi'olani had "lost a fair amount of money on the QUEST business."

Heywood said he hopes to find positions for the approximately one dozen employees that will be affected when Kapi'olani drops its QUEST program within the Hawai'i Pacific Health System, which includes Straub and Wilcox Hospital on Kaua'i.

Yamashita said Queen's will also try to place employees, but those who can't be placed will receive severance packages.

At its peak, Queen's Health Management had 215 employees and insured 190,000 Hawai'i residents. It still operates a processing and administration operation for other insurance companies, but is trying to sell that business.

"Queen's has been very patient in permitting us to find a purchaser so it would not disrupt not only the lives of the people we cover, but the employees as well," Yamashita said.

QUEST, which started in 1994, is a state program that provides health or dental insurance for more than 125,000 Hawai'i residents who cannot afford their own commercial coverage but do not qualify for other programs.

Advertiser Staff Writer Curtis Lum contributed to this report.

Reach Frank Cho at 525-8088, or at fcho@honoluluadvertiser.com.