In 1996, a group of physicians and others associated with the University of Hawaii John A. Burns School of Medicine launched University Health Alliance.
The idea was to create a university-based health maintenance organization (HMO) or university-based practice of medicine similar to that found at universities such as University of California at San Francisco, Stanford, Yale and Harvard.
That didn’t work out. HMOs nationally – if not locally – were in poor repute and capitalization requirements were onerous. So UHA launched as a preferred-provider program, effectively an insurance company. It remains so today, with about 32,000 members, focused primarily on smaller and middle-size businesses.
HB: If you had to do it over, what would you do?
(Laughs) I would have retired. It was a great idea, but it just didn’t work out, so we found ourselves with this insurance company. We no longer saw ourselves as a means of creating a practice of medicine, but as a way to provide insurance for about 32,000 members.
HB: Are there lessons you learned that might apply to other businesses?
I think we learned to manage our risks pretty well. We learned that providing quality service is an extremely important thing, especially when you are competing with a large company that owns a great deal of the market share.
HB: What was your biggest obstacle starting out?
We didn’t have enough money. In any business you have to be well capitalized, but with insurance, you have to have reserves.
HB: Has this experience taught you any business lessons?
The important thing about the insurance business is not taking on too much risk. It’s easy to build membership, but you have to watch risk. Market share is important. But profits are more important.
HB: What keeps you going?
It’s a combination of pride and stupidity. You keep going and suddenly, we are successful. It’s got to be fun.