OMNI HEALTHCARE: Ditches Spin-Off Plan In Favor Of Turnaround
After failing to receive a tempting bid, Sacramento-based Omni Healthcare announced last week that it will be retained by its owners and initiate a turnaround strategy to pull out of the red by 1999 and "turn a profit in 2000." The Sacramento Bee reports that the announcement contrasts with the co-owners' -- Sutter Health of Sacramento and St. Joseph's Regional Health System -- plan to shed the ailing HMO "or find a new capital partner for the 142,000-enrollee plan." CEO Robert Fahlman intimated that the highest bid was 40% below Omni's asking price, prompting owners to decide "to stick with the HMO." Omni's move is expected to precipitate premium hikes of 6% to 10% next year and withdrawal from "unprofitable rural counties, such as Humbolt and Del Norte" (Young, 12/4). The Sacramento Business Journal reports that premiums for individual policyholders will increase "by a breathtaking 58%, effective Jan. 1." Sacramento health care consultant Albert Lowey-Ball predicts Omni will struggle for a while to come. "They face significant obstacles in achieving break-even," he said. In an effort to speed its recovery, the HMO hired the Hunter Group, a consultant "known in the industry for slashing staff to improve efficiency" (Robertson, 12/7).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.