Why we're pursuing a sale of M-CARE:
Information provided to the news media during a conference call 9/12/06

This decision has been made with great care, and I believe it is the right decision for the Health System, for the University of Michigan, and for the customers of M-CARE.  The U-M Health System has a complex and critical mission, and we need to stay sharply focused on it.  As we plan for the future, we must ensure that our resources are directed to our core mission.  This will allow us to focus on what we do best and what the state and region need most – our expertise in patient care, research and education.

You may ask why we are pursuing the sale of M-CARE at this particular time.  It is the right time for several reasons.  The insurance provider industry is undergoing a great deal of change.  New types of consumer-driven health plans are emerging, and changing technology makes it likely we will need to make major capital investments in order to remain competitive – resources that would have to be diverted from our core activities.  Because of this changing business climate, the Health System and many other plan owners are pursuing opportunities they may not have considered in the past.

At the same time, the Health System as a whole is in a position of strength, both from a financial and quality perspective.  In addition, M-CARE is a very well-run health plan with a reputation for high quality, customer satisfaction, and low administrative costs, which makes it attractive to Blue Cross Blue Shield.  We, too, regard Blue Cross Blue Shield as a strong potential partner because of its track record in improving the health of our citizens.  We share similar missions as nonprofit organizations that are working to improve the quality of health care while reducing costs.  Many of you have written about our joint project that has saved lives and dollars by reducing complications in angioplasty patients in hospitals across Michigan.  In a minute I will say more about the potential for future work in this area.

Many in our community will want to know what we are doing to assist the employees of M-CARE, who have worked so hard to make it a successful organization.  We have a solid plan in place for M-CARE employees – to retain them through the sale and assist them in the transition period after the sale.  The sale will require additional approvals and so it likely will not be final for several months.  M-CARE will continue to operate as usual during this period until the sale is final.  Once the sale is final, many M-CARE employees will be retained to provide services to Blue Care Network for a transition period.  Precisely how many employees will be employed and for what period of time hasn’t been determined yet.

After that time, we will assist employees in transitioning to other positions at Blue Cross Blue Shield and the Blue Care Network, other areas of the University, or in the community.  The U-M Reduction in Force policy and the federal Worker Adjustment and Retraining Notification Act will be applied, ensuring that employees receive at least 60 days’ notice and in the case of longtime employees, 90 days notice if their services will no longer be needed.  For those employees we will also provide additional outplacement support.

I also want to assure all members of M-CARE that there will be a smooth transition for their health care coverage, with no gaps in coverage.  M-CARE health plans will remain in place through the length of each employer’s contract with M-CARE and through renewals for 2007 coverage.  After that, they will be able to select coverage from among a variety of high-quality offerings from Blue Cross Blue Shield.  Another appealing aspect of Blue Cross Blue Shield as a partner is that its provider network includes nearly every M-CARE provider.  We expect that most M-CARE members will be able to continue seeing their current doctors as part of the Blue Care Network.

For University of Michigan employees, all of this means that open enrollment in October will proceed just as it has in the past, with employees able to choose M-CARE health plans for 2007 at the premium costs listed in our open enrollment materials.  For 2008, the University will be working with Blue Cross Blue Shield to offer a health plan that is intended to provide the same level of benefits and choices as the current M-CARE offerings.  There will be no lapse in coverage for our employees, retirees, graduate students and their covered dependents or survivors.

The University will remain in charge of our benefits and how they are designed.  We must keep our benefits program competitive in order to recruit and retain the best faculty and staff.  We are committed to offering a choice of high-quality, comprehensive health plans.

One aspect of this proposed sale that I am very excited about is a new joint venture that we are planning. The Health System and Blue Cross Blue Shield will be equal partners in this project, which, simply put, will focus on finding ways to make health care better. The new entity will commission quality-improvement projects and research studies that will aim to improve the quality, safety, efficiency and appropriateness of health care in Michigan.

Specific projects might focus on ways to help people with diabetes manage their disease, improvements in specific types of surgery, insurance plans for the uninsured, and mammogram use. Any area of health care in which there is opportunity to improve the delivery of services, get the right care to the right person at the right time, prevent medical errors, reduce risks, avoid unnecessary treatment, or get more value for dollars spent would be a potential focus.

Finally, let me say a few words about the next steps.  This proposed sale agreement will go to the U-M Board of Regents for consideration at their September 22 meeting.  If the Regents approve the agreement, it will require further approval from government regulators.  This process could take several months. If all approvals are given, a sale likely would occur in late 2006 or early 2007.

Message from Dr. Kelch to Health System Faculty and Staff

UMHS News release

Background on M-CARE