Healthcare
Healthcare Facilities
AMEX: IGR
Integra, Inc.
1060 First Avenue –
Ste. 410
King of Prussia, PA 19406
Phone: 610-992-2600
Stuart S. Piltch
President and
Chief Executive Officer
Interview conducted by:
Walter Banks, Co-Publisher
CEOCFOinterviews.com
September 2001
BIO OF CEO
Stuart Piltch, new President and CEO of Integra, Inc., was most recently
the founder and Managing Director of Global Benefits Solutions (GBS). Mr. Piltch’s career includes time as a
Regional Director for MetLife in its Group Insurance and Pension Division, as well as
being a Principal at Buck Consultants, Inc. – an actuarial consulting firm now owned
by Mellon Bank, and as the Chief Operating Officer for HealthNow – a $1 billion
healthcare plan operating in New York.
About Integra, Inc.
Integra,
Inc. is a healthcare management and solutions company providing employee assistance
programs (EAP), work life programs, managed behavioral healthcare, and consulting services
for over 1.15 million employees and members; and Global Benefits Solutions provides
consulting services to companies with over 150,000 employees.
Integra
is the 10th largest behavioral health management company in the industry.
Previously, there were two lines of business – Employee Assistance Programs and
Behavioral Health Carve Outs for health plans and our client employers – but we have
recently brought on a third through the acquisition of Global Benefits Solutions
(GBS). GBS is an actuarial consulting practice that looks at how compensation,
benefit and retirement plans reinforce the business strategies of a corporation. GBS also
works with the employers on liabilities, costs, business strategies and funding
arrangements.
CEOCFOinterviews - Mr.Piltch, can you give us a
brief history of Integra, Inc?
Mr. Piltch: “The
Company was originally founded in 1977 as the Center for the Study of Adult Development, a
non-profit organization affiliated with the University of Pennsylvania Department of
Psychiatry. Integra's EAP?the Employee Assistance Service and Education program (EASE)?was
developed shortly thereafter. Some years
later Integra entered the managed care business and implemented an integrated,
outcomes-based EAP/managed care service.
In August 1994, Apogee, Inc., a public company
operating multidisciplinary outpatient mental health group practices, acquired Integra.
Throughout the 1980’s Apogee (Integra) continued to build upon past success and
maintain consistent growth in the EAP services industry.
In these years, while many EAP’s provided services largely devoted to
substance abuse and mental illness, the Company continued to add to its growing list of
employee-related services, and establish itself as a leading regional provider of EAP
Services.
In
May 1998, Apogee sold its group practices and its board of directors voted to change the
parent company name to Integra, Inc. making Integra a publicly traded company on June 15,
1998. It is headquartered in King of Prussia, Pennsylvania.
The last part of the nineties proved fruitful for Integra as it continued to grow,
signing many fortune 100 companies as clients. In
late 1999, Integra’s EASE program won the Employee Assistance Professional’s
Association industry award for its work with a large, notable client.
Integra
has recently restructured to focus even more resources to its EAP services division,
bringing in a strong management team with vast healthcare, EAP and general business
experience. Integra was at one time a part of
the Foster Management group of companies in Philadelphia. They also owned NovaCare as well
as some other healthcare companies. Integra
was in essence impeded in Apogee, which was an 80 million dollar company that provided
benefits on sight through bricks and mortar. It was not a stand-alone business until about
2 years ago.”
CEOCFOinterviews: Can you give us a picture of
your revenue model for each business line?
Mr. Piltch: “On the Behavioral Health
side we either contract for a management fee to help an employer or a health plan perform
utilization management/care management or quality management of the behavioral health
business for the employees or members. In other words, if I am receiving psych benefits or
alcohol or substance abuse benefits under a health plan. In some cases we are capitated,
thus at risk, and in other cases we are performing a management function and therefore
being paid on a fee basis for our services.
Our second line of business, Employee Assistance Programs is a risk based business
where we provide employee assistance plans to employee populations of corporations, most
of which are major corporations. We have a 3-5-8 session models for people who are in
crisis or in need. We offer them sound clinical direction from their initial call to us,
and then, depending upon the level of care their employer has contracted, would refer them
to credentialed behavioral healthcare providers, or help to integrate them in with their
health plan provider or with some other form of care where their needs could be met. This
is a non-ERISA (Employee Retirement Income Security Act) benefit, and one that most
employers with over 1,000 employees offer as a part of their benefit portfolio to their
employees.
The third line of business, Global Benefits Solutions, is a fee based organization
providing actuarial and benefit consulting services to major employers in the U.S. and
some smaller employers as well.”
CEOCFOinterviews: Which of your three business
lines is currently providing Integra with its greatest revenue source?
Mr. Piltch: “If you look at roughly the
29 million dollars that make up the company, the Behavioral Health Carve Out for health
plans is probably about 13 or 14 million dollars, while the Employee Assistance Plan is 12
million dollars and benefits consulting is about 3 million dollars.”
CEOCFOinterviews: How do you plan to grow your
benefits consulting business?
Mr. Piltch: “The benefits consulting line
of business is only a year old and that market is a major opportunity. We will be looking
at organic growth as well as acquisitions in that area, and frankly all of our areas. Our
stated goal is to be a one hundred million dollar company by and including, January 1,
2004.”
CEOCFOinterviews: Can you please detail your
growth strategy for the entire scope of your business?
Mr. Piltch: “I think the nature of all
three lines of business is changing, and that we will see them merge. The newly formed
system of management is designed so that each business line has its own President, and
supported by everything it needs to run that business. Each unit will ‘purchase’
some services from our core business, such as for finance and some other areas that
don’t need to be duplicated.
Looking
at the health plan business, the major opportunity for Integra is the Patients Bill of
Rights. If you look at all the potential lawsuits, they are not about “I didn’t
get my claim paid.” The major liabilities on the health plan side are access to
quality care. As the recognized leader in care management and quality management in our
industry, we are proud of the fact that the providers we work with regularly tell us that
we have been very helpful to them in looking at solutions, unlike others in the industry.
We don’t look at discharge rates or average length of stay; rather we look at an
episode of care and how we can help the person become healthier. Integra’s
methodology tends to work out best for our health plan clients. Therein lies an exciting
opportunity for us to further distinguish ourselves through the legislative demands for
quality care.
Further,
we are in the midst of working out some arrangements with some other entities, where
we’d be working on the co-morbidity tie between behavioral health and physical
health. If we can reach an employee population – together with the physical health
people – to impact the health status of the population, we believe this will also
lead us to a major opportunity. This ties into employee assistance programs because
Integra is supporting the person seeking care as an employee, rather than as a patient,
while affecting their health and well-being by trying to help them help themselves.
Through
the data and the understanding of individual employee populations, we will have the tools
to assist the client employer access and manage risk in some very smart ways that help all
concerned. This allows employers to take a proactive role to ensure that people are
receiving the most appropriate and supportive care.
With
regards to EAP, the growing field is tied to what is called: Work Life benefits. This is
where services and products are delivered to employees to make them a more productive
worker and a healthier person. For instance, the typical Work Life program is tied to EAP
because usually a triggering event has occurred to move people to call for help. The event
is often something to do with healthcare, workplace, adult care/child care or something to
do with finance. Work Life specialists would
probably suggest an array of appropriate consumer financial consulting, as well as
services tied to credentialed child care/adult care, and a health care help line to help
people who need help directing their way through the healthcare delivery system. Whenever
it does not breech the employee’s confidentiality, we’d also be able to work
with the employer on anything that is a triggering event in the workplace. Most employers
are seeking or have chosen Work Life services as another facet of their benefit portfolio,
and we believe there will continue to be remarkable growth in this aspect of the industry. The manner in which an EAP can integrate Work Life
resource as referral, as well as other services, such as concierge, will continue to be
critical factors in determining success. Integra
is working toward offering a turnkey solution to employer/employee services that will
support their population in productivity, health and wellness.
The
third line of business ties all of these other aspects together is our smallest division,
Global Benefits Solutions, which examines this and other industry data to offer strategies
and solutions for specific employers or industries and would ask the question: “How
do you want to design your plan?” Moreover, it will answer the question: “How do
you work with these people to develop wellness initiatives, and disease management
initiatives?” They will be able to examine the risks, and the health status of the
population, tying dates together to do so, and asserting initiatives.
In
all three instances, we feel certain that we will grow organically. We have some good
opportunities in front of us for January 1, 2002. January
1st is a big date for us because most plans switch at that time and we are
going to be acquiring companies in all three lines of business.”
CEOCFOinterviews: How do you acquire your
business?
Mr. Piltch: “Integra has an in-house
sales staff, but the time has come to move past a model where sales people go out to sell
out one account at a time, which is expensive and time consuming. We are now looking at
creating some pretty sophisticated and repetitive distribution channels, via insurance
brokers, accounting firms, law firms, and anyone who is a business consultant to an
employer or to a health plan – working around risk and health issues.”
CEOCFOinterviews: Would you then be
distributing your product through networking?
Mr. Piltch: “That is correct, or you may
also call them intermediaries.”
CEOCFOinterviews: How do you go about reaching
the intermediaries?
Mr. Piltch: “Our sales force would
approach individuals working with human resources and the finances departments, who in
turn approach the employer, and the first tier players are certainly interested.”
CEOCFOinterviews: How much of your business is
done this way?
Mr. Piltch: “Over half of our business
has a broker, consultant or other intermediary that we are working with, and we’ve
got some others that are growing.”
CEOCFOinterviews: When you are looking at
companies with which to do business, how many employees do you like them to have?
Mr. Piltch: “Interestingly enough most
employers with over 1,000 employees have Employee Assistance Programs. Therefore, while we
certainly want to sell downstream to the smaller employers, many of them with fewer than
500 employees just don’t have EAP.
On the Health Plan side, we look at anyone with 100,000 members or more in a given
geographic area, where they have enough density that we can contract the network and/or
effect quality of care in a positive way. You have to have enough network bulk, and
I’d have to say that 100,000 members is a good number. We may look at smaller, but
probably wouldn’t take risk on fewer than 100,000 people, but we certainly would add
management consulting there on quality management and care management.
On the actuarial side, we have clients with 500 employees up to 25 or 30,000
employees. Therefore, we have some pretty decent size clients.”
CEOCFOinterviews: How do you stay ahead of
your competition?
Mr. Piltch: “We feel that our size gives
us an advantage. We are the 10th largest company in this industry, and we have
2½% market share. The two biggest behavioral health management companies are United
Behavioral Health and Magellan Health Services, with Magellan being the biggest, but they
don’t have a strong interest in EAP. Furthermore, Magellan as the dominant market
player doesn’t want anything to change because they have a huge market share. They
have a lot of governmental plans, including Medicare and Medicaid. United Behavioral
health is a subsidiary of United Health Care, and EAP is not United Health Care’s
prime business. In both cases, what they do with bulk, we do with creativity.
Anyone familiar with the industry would say that we are the best at care
management, and that will go a long way in the new environment. The other factor in our
competitive edge in this industry is that we have good resources as a 28 or 29 million
dollar company. We are in that nice sweet spot, I’d like to be a little bigger pretty
soon, but basically, we have enough resources to make change and the motive to make
change, because we are not number 1 or number 2. The way we stay ahead is by continuing to
improve through data and other proprietary tools on care management. We are also in the
midst of changing over our I/S platform to one that will be the leader in the industry. We
are taking an established claims system, and its quite common in the industry to do this,
and inserting a business specific front end that will position us well for the future as
we go more from an intake and reaction business to being an outreach and proactive
business.”
CEOCFOinterviews: Does your 2½% market share
take in to account the entire industry?
Mr. Piltch: “It’s about 2½% when
you look at the combined EAP/Behavioral Health Industry.”
CEOCFOinterviews: Do you believe that is where
Integra should be at this point?
Mr. Piltch: “I’d like for us to be
somewhat bigger, and frankly if we doubled in size we would have a greater market share,
because there are a lot of little companies out there, and even at 30 million dollars we
are not that large by any stretch. The question becomes how to grow, and one way to do
that is to bring on more and more health plans, because you would grow in big chunks. That
kind of scalability is something that we can do with our new system, because it takes care
of some of the issues that we’ve had in the past. Moreover, we don’t just want
to be in the Health Plan business, as are United and Magellan. I think that is a very
attractive business, but I’m not as interested in paying claims as I am into helping
to manage care. We at Integra are much more interested in helping the health status of the
population and being viewed as a value added to employers and health plans in that way.
It’s very easy in this business to be hung up on claim processing and making sure
everyone is paid. I would say that most Behavioral Health companies are not the strongest
claims payers, because they are not administrators. In fact, I think the resource that is
in some way put on that is drawn away from the need to focus or stay on care management.
However, that is where Integra is focused, on care management.”
CEOCFOinterviews: Do you have to cash and/or
credit to continue your growth strategy?
Mr. Piltch: “Yes, we are more than
confident that with some continued improvements in efficiencies, investments, and
anticipated organic growth that we can meet the goals that we have set as an
organization.”
CEOCFOinterviews: What final thought would you
like to leave with your current shareholders and potential investors?
Mr. Piltch: “Integra
has transformed itself from a purveyor of related, but separate lines of business into a
cohesive behavioral healthcare management and solutions company. Permitting the Company to focus on using the
essence of its successes – care excellence – to further growth, while carrying
that excellence beyond individual care to all levels of excellence in a proven, marked
way. For instance, in recognizing that the
EAP industry is presently fragmented with no clear industry leader, Integra has realized
that the definition of quality service has been left unclear. Our administrative goal is to establish measurable
and published benchmarks for quality in the areas of intake, claims and reporting. These measures will be both objective and
subjective. Our definition of success will be
when we exceed customer needs and expectations. This
will enable us to enjoy strong organic growth; which will be coupled with a focused and
selective acquisition strategy. Our singular
goal is to be recognized as the clinical and operational leader for each of our lines of
business.”
