About Health Care Service Corporation, A Mutual Legal Reserve Company

Founded in 1936, Health Care Service Corporation (HCSC) is a licensee of the Blue Cross and Blue Shield Association. The mutually owned company consists of five regional Blue health plans including Blue Cross and Blue Shield of Illinois, Blue Cross and Blue Shield of Texas, and Blue Cross and Blue Shield of Oklahoma. Other markets include New Mexico and Montana. HCSC provides group and individual health plans -- including HMO, PPO, point of care, high-deductible, traditional indemnity, and supplemental Medicare -- to some 16 million members, primarily in Illinois and Texas. Through subsidiaries, it sells dental, life, and disability insurance and provides employee benefits solutions to multinational companies.

Operations

Complementing its core product offerings, HCSC also provides life insurance coverage through subsidiaries under the Dearborn National brand (including Dearborn National Life Insurance). HCSC also underwrites and administers certain Medicare and Medicaid business through subsidiary HCSC Insurance Services Company. HCSC offers dental benefits through its Dental Network of America unit.

Additional offerings include pharmacy benefit management services through its minority stake in Prime Therapeutics and health care IT services through several holdings. Its Medecision subsidiary provides health care data exchange services, and its partially owned Availity subsidiary provides a health care clearinghouse and online e-health information services.

Geographic Reach

HCSC operates in Illinois, Montana, New Mexico, Oklahoma, and Texas. It has more than 60 local offices. Illinois accounts for about 55% of the company's total customers, and Texas accounts for another 35%.

Financial Performance

Financially, HCSC has a strong capital base (approximately $12 billion) that enables it to withstand volatility in short-term earnings and provide for any potential acquisitions. As a mutual company, HCSC operates from a conservative perspective, taking a long view in managing its financial position rather than focusing on near-term profits. The company's total operating revenue stands at some $36.8 billion.

In 2018, net income tripled to some $4.1 billion. Much of that increase was due to changes in the federal tax law, but an influx of new customers also contributed to the higher earnings. The higher net income also continued a turnaround for HCSC, which had reported a $65.8 million loss in 2015.

Strategy

HCSC has expanded its operations over the years mainly through strategic acquisitions of independent BCBS companies, allowing it to benefit from economies of scale. The company also leverages its brand and enhances its product offerings as a way to keep a competitive edge and balance its membership and earnings growth. Its core business targets include group, retail, and government clients.

Another element of its strategy is to make infrastructure improvements, focusing on better information technology as a means to improve health care costs. (This is an area of focus for many health insurers and providers as economic and health reform pressures increase.) HCSC is also utilizing technology to increase customer engagement.

After having reduced expenses and managing medical costs, HCSC is now investing heavily in the development of affordable health coverage. It has launched such initiatives as employee wellness programs and collaborative care to improve patient outcomes at lower costs.

In 2018 the company sold subsidiary Academic HealthPlans to that firm's founder and CEO. HCSC had acquired the company in 2012 and spent six years building up its student health insurance operations -- again, using its size to deliver strategic and financial strength.

Company Background

HCSC's history dates back to the 1936 establishment of Chicago Plan for Hospital Care, a hospital care pre-payment plan. The company issued its first health insurance policy in 1937. 

Renamed Hospital Service Corporation, the firm adopted the Blue Cross (hospital services) symbol in 1939 and the Blue Shield (physician services) symbol in 1947. In 1975 the Blue Cross and Blue Shield operations merged as Health Care Service Corporation. Other state BCBS plans began to join the company: Texas in 1998, New Mexico in 2001, Oklahoma in 2005, and Montana in 2013. 

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Health Care Service Corporation, A Mutual Legal Reserve Company

300 E RANDOLPH ST
Chicago, IL 60601-5014
Phone: 1 (312) 653-6000

Stats

  • Employer Type: Privately Owned
  • SVP and CFO: Kenneth S. Avner
  • SVP and Enterprise Chief Medical Officer: Stephen Ondra
  • President and CEO: Paula Steiner
  • Employees: 14,264

Major Office Locations

  • Chicago, IL

Other Locations

  • Concord, CA
  • Woodland Hills, CA
  • Denver, CO
  • Atlanta, GA
  • Danville, IL
  • Downers Grove, IL
  • Lombard, IL
  • Quincy, IL
  • Rockford, IL
  • Springfield, IL
  • Metairie, LA
  • Northville, MI
  • Southfield, MI
  • Ellisville, MO
  • Albuquerque, NM
  • Roswell, NM
  • Las Vegas, NV
  • Rochester, NY
  • Oklahoma City, OK
  • Tulsa, OK
  • Pittsburgh, PA
  • Bartlett, TN
  • Abilene, TX
  • Amarillo, TX
  • Austin, TX
  • Corpus Christi, TX
  • Dallas, TX
  • Houston, TX
  • Lubbock, TX
  • Marshall, TX
  • Mckinney, TX
  • Plano, TX
  • Richardson, TX
  • San Angelo, TX
  • San Antonio, TX
  • Wichita Falls, TX
  • Henrico, VA
  • Lake Forest Park, WA
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