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 BCBS markets include New Mexico and Montana. HCSC provides group and individual health plans -- including HMO, PPO, point of care, high-deductable, traditional indemnity, and supplemental Medicare -- to some 13.2 million members, primarily in Illinois and Texas. Through affiliates and subsidiaries, it sells dental, life, and disability insurance and provides employee benefits solutions to multinational companies.
Complementing its core product offerings, HCSC also provides life insurance coverage through subsidiaries under the Dearborn National brand. These include Dearborn National Life Insurance, Dearborn National Life Insurance Company of New York, and Colorado Bankers Life Insurance. HCSC also underwrites and administers certain Medicare and Medicaid business through subsidiary HCSC Insurance Services Company. Another unit, TMG Health, provides third-party administration for some Medicare, Medicaid, and group retiree health plans. HCSC offers dental benefits through its Dental Network of America unit.
On a more limited basis, HCSC also offers accident, auto, and homeowners policies in Oklahoma and Texas through its Oklahoma-based GHS Property and Casualty subsidiary. Over the past five years, however, severe storms have swept away much of its surplus, despite HCSC's capital infusion of $20 million.
Additional offerings include policy administration and claim adjudication services through subsidiary Hallmark Services Corporation; 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 management software and data analytics services to doctors and managed care companies, and its partially owned Availity subsidiary (with its RealMed subsidiary) provides business and clinical health information solutions and e-health information services that support real-time and batch electronic data interchange.
Sales and Marketing
About 70% of the not-for-profit company's core health insurance customers are part of national and large local employer plans, while small groups, federal plans, and individual coverage make up the remaining membership segments.
Financially, HCSC has a strong capital base 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.
HCSC has grown 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. Additionally, HCSC has set up an office in Washington, D.C., to keep tabs on changes in health care reform and to lobby for its concerns. The company has also enacted some internal restructuring measures to lower its administrative costs and adjust for the effects of poor economic conditions (including lower member enrollment levels and increased competition).
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.) The firm has introduced online enrollment and health care management tools, as well as a comprehensive care management system (called Blue Care Connection) which integrates and analyzes data from claims forms, health care providers, and patients themselves, in order to reduce unnecessary costs and inefficiencies.
Mergers and Acquisitions
In 2013 HCSC added its fifth BCBS provider, Blue Cross and Blue Shield of Montana, for some $40 million. The acquisition added about 250,000 customers.
In anticipation of health reform laws that will be taking effect in 2014, the company acquired a stake in health benefits spending management firm Bloom Health in 2011. HCSC, along with health insurers WellPoint and BCBS of Michigan, will use the online commercial insurance exchange to allow employers to contribute a certain amount towards their employees' chosen health plans on a national basis.
As a mutual reserve company, HCSC is the largest customer-owned health insurer in the US.