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The Honolulu Advertiser
Posted on: Friday, May 19, 2006

State's attack on AlohaCare unwarranted

By James Burns

I am the treasurer of AlohaCare, a Hawai'i nonprofit corporation whose primary business is to provide healthcare services to Quest members enrolled in this state's Medicaid program. I am writing in response to the misleading, wholly inaccurate and mean-spirited letter from the state's Med-Quest division in which AlohaCare is irresponsibly described as a "wealthy corporation."

First, a bit of history. AlohaCare started from nothing in 1994 as a nonprofit corporation founded by Hawai'i's community health centers; its only start-up funding was a donation from the Queen Emma Foundation. Representatives from community health centers are on the AlohaCare board and also citizens such as myself from various walks of life who are not associated with community health centers.

During its early years, AlohaCare either lost money or made bare-bones gains in Quest. During its first seven years in the Quest program beginning in 1994, AlohaCare had a cumulative operating loss, losing money on operations in four of seven years.

Margins in the managed-care industry typically have wide swings: in 11 years of Quest participation, AlohaCare has had three above-average years, two average years and six below-average years, and these cumulative historical operating margins are below those experienced in the HMO industry.

Here are the facts: AlohaCare was a true pioneer in the Quest program, and after its first seven years had a cumulative operating loss in Quest. Since 2002, AlohaCare has saved the state of Hawai'i at least $20 million as the low bidder in the Quest program.

If the Med-Quest division has a problem with its low-bidding health plan, then I am at a loss to explain its behavior. Med-Quest circulated a memo to legislators last week in which Med-Quest asserts HMSA and Kaiser which provide care to more than 70 percent of Quest members will probably not be motivated to lower their Quest bid rates, which are at the high end of the range. So instead, Med-Quest targets AlohaCare, trying to bully it in a public forum, attempting to influence how it bids the Quest program. Is this Med-Quest's idea of competition? Is this legal? Is this appropriate?

Gracious sakes, what is going on at Med-Quest? It criticizes its low bidder, AlohaCare, and then publicly acknowledges to legislators the two giants of healthcare in Hawai'i may somehow submit high Quest bids. Is something wrong here with the stewardship of our public money?

AlohaCare uses its operating margins to build a reserve fund so it can continue to be a financially sound grass-roots community organization and return funds to the local healthcare community, including start-up funding for the West Hawai'i Community Health Center and the Ko'olauloa Health and Wellness Center, innovative Native Hawaiian healing programs, preventive health programs, sponsorships of community health campaigns like Teen Pregnancy Prevention and Covering Kids, along with University of Hawai'i college scholarships for low-income students.

I do not understand the animosity the Med-Quest division displays toward AlohaCare. We are the low bidder in Quest and we are a solid corporate citizen. We keep our money, our jobs and our business in Hawai'i.

Last, I am not some self-appointed, uninformed "expert" who just fell off the turnip truck.

Prior to retiring to Hawai'i in 1998, I was the CEO or administrator for Medicaid health plans and management organizations in seven states, including Hawai'i. Probably no one in the state of Hawai'i has more experience (some 20 years) in managed-care Medicaid programs. And in my professional opinion, the Med-Quest division has demonstrated seriously flawed thinking: It publicly opposes its low bidder, it believes HMSA and Kaiser are about to submit high bids under Med-Quest's own self-designed "brand-new" program and it is now determined to implement "positive enrollment," which disenfranchises Quest members, poses a potential danger to their healthcare and threatens to cause a period of chaos that will result in unnecessary expenditures in terms of manpower and financing within Med-Quest and the provider community, which defeats the purpose of cost-lowering competition in the marketplace.

I do not believe Med-Quest understands the implications of what it is doing.

James Burns is the treasurer of Hawai'i AlohaCare. He wrote this commentary for The Advertiser.