State approves Vivius' health-plan system
Minneapolis / St. Paul Business Journal - by Scott D. Smith Staff reporter
Minneapolis-based startup Vivius recently received state regulatory approval to sell its consumer-driven health insurance product to Minnesota insurers.
Vivius, founded in 1999, is trying to capitalize on two trends in health care: consumer-driven health care and defined-contribution health insurance -- both of which are seen as possible ways to stifle rising premiums and create a more efficient system.
Vivius' Internet-based product allows people to create a personal health plan through a registration process that provides choices such as primary care doctors, specialists, hospitals, co-pay amounts (as in a standard $10 co-pay) and co-insurance (a percentage a patient pays of each bill).
Vivius now needs to find an insurance company that will offer and brand its product. Vivius' business model is to charge those insurers a transaction fee when their members use the system. Vivius does not plan to offer a retail product.
"We can go ahead and actively market a product in Minnesota," said Vivius CEO and President Dave Teckman. The Department of Commerce's approval also is a strong indicator that Vivius will win approval for the product in other states, he said.
Vivius expects the first introduction of its product to occur in Washington state during the first quarter of 2002. Teckman said the company has an agreement -- yet to be announced -- with a brand-named managed care provider in that state.
In Minnesota, Vivius has had discussions with the largest health insurers: Bloomington-based HealthPartners, Eagan-based Blue Cross and Blue Shield of Minnesota, and Minnetonka-based Medica, he said.
But Judye Fawver, vice president of New York-based Marsh USA Inc., a risk-specialist company, said it's more likely that some other insurer not active in this market might want to use the Vivius product in Minnesota.
"Insurance carriers might come back into this market thinking that they could get some market share with this concept," Fawver said.
State regulations chased many for-profit insurers out of Minnesota in the 1990s, she said. The Vivius product is unique enough that it might give an outside insurance company a competitive edge over established health plans. Without such an edge, it has been difficult for for-profit companies to break into the Minnesota market, she said.
Overall, she thinks the approval is good news, since it could add a new model to a market that lacks competition.
The Vivius tool is designed to work with defined-contribution insurance -- where employers give employees a lump sum to pay for their health care -- since it allows employees to save money by creating less expensive plans.
For example, an employer could contribute $3,600 as a health benefit. An employee using Vivius creates a $5,000 plan. The employee then has the choice of sticking with that plan and covering the difference with monthly payroll deductions or altering the plan by choosing less expensive doctors and higher co-pays and co-insurance.
Scott D. Smith can be reached at (612) 288-2107 or ssmith@bizjournals.com.
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