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He's trying to stimulate new life at Group Health
Star Tribune: Newspaper of the Twin Cities
January 26, 1987
Author: Maura Lerner; Staff Writer

George Halvorson was duck hunting on the shores of Blueberry Lake in northwestern Minnesota when he realized he had a problem. His quarry had fallen on the water, and without a boat or a dog, he had no way to bring it in.

All he could do was wait for the bird to drift ashore. So he sat down and started sketching. Before long, he had designed a new invention - a duck retriever that works like a fishing pole - which he later patented.

Halvorson, it seems, has a knack for finding inventive solutions. And colleagues say it's a knack he's carried over in his professional life as one of the rising stars of the Twin Cities health care industry - and now president and chief executive officer of Group Health, Inc., a Twin Cities-based health maintenance organization.

At 39, Halvorson has spent 18 years in the business charting new ground. He was one of the first to design an HMO for Minnesota's poor, through St. Paul-Ramsey Medical Center. He also helped create an HMO for injured workers (as an alternative to ordinary worker's compensation insurance). And he fought the federal bureaucracy to try to establish one of the first HMOs exclusively for the elderly.

Now, as head of the 210,000-member Group Health, Halvorson is facing his biggest challenge yet. He's trying to breathe new competitive life into the Twin Cities' oldest HMO at a time when its growth has stagnated and the health care marketplace is more volatile than ever.

But Halvorson believes Group Health is in a strong position to compete as it marks its 30th anniversary this year. "Our new slogan," he said with a grin, "is: `Don't trust anyone under 30.' "

Halvorson took the helm at Group Health in July, when he was hired over nine other finalists to succeed Leonard Schaeffer, who resigned last February after 3 1/2 years in the top job. The board of directors conducted a nationwide search before selecting Halvorson, who was then president of another smaller HMO, Senior Health Plan in St. Paul.

"If we were looking for any one element, we were looking for marketing skills," said Merlyn Scroggins, chairman of the board at Group Health. "And he obviously has those."

His colleagues describe him as both engaging and quick-witted. And on first glance, he can seem almost deceptively laid-back. "He comes off as a young man who is casual and comfortable," said his former boss, James A. Rice, senior vice president for Health Central Corp., a hospital and HMO management group in Brooklyn Center. Initially, he said, "I don't think people recognize (his) depth of experience and understanding."

In his spare time, Halvorson is, to put it mildly, a man of many talents. Besides hunting, he enjoys cooking, windsurfing, sailing and runs a "private wildlife refuge" on an old farm in Hubbard County. He also finds time to invent games and write songs with a partner (they even have an agent), and recently put the finishing touches on a book on health care, which will be published by Prentice-Hall this year.

"I wrote the entire book on airplanes," he explained, saying it was better than "reading People Magazine" to ease the boredom. The book, he says, is a how-to guide to buying health insurance, and it reveals some of the tricks of the trade for getting the best deal. "I'm a little bit nervous about the book," he says with a smile. "I may lose some friends in the industry."

In a sense, Halvorson backed into the health care industry by accident. A one-time newspaper reporter in Fargo, N.D., he came to the Twin Cities in the late 1960s as a graduate student at the University of Minnesota. "I considered becoming a political scientist or an English professor," he said. But to support himself, he took a "temporary" job in public relations at Blue Cross and Blue Shield of Minnesota.

"I thought I'd work two or three years at the most, and go off to do something else," he said, "and I ended up loving it."

He went on to become corporate planner, where he noticed that a small subsidiary, called Minnesota Indemnity,. Inc., or MII, was floundering on the brink of extinction. "The company was losing a good bit of money, and as corporate planner I was asked to come up with a plan. I came up with two plans. One, to divest. Two, to resurrect. I managed to persuade them to resurrect."

He also managed to persuade his bosses to let him do the resurrecting. As managing director, he helped streamline the operation and introduce several new types of insurance plans.

"MII has been making money ever since," Halvorson says.

In fact, it now writes over $1 billion in life insurance policies alone, according to Norman Storbakken, Halvorson's colleague and group vice president at Blue Cross and Blue Shield of Minnesota.

At about the same time, Halvorson spotted another struggling operation within Blue Cross, and persuaded management to let him take that over, too. It was a fledgling HMO that had few members - most of them Blue Cross and Blue Shield employees. Halvorson began streamlining this operation as well. And he set about aggressively recruiting new members.

The HMO, which later became known as HMO Minnesota, starting doubling in size every year, until it reached a peak of some 74,000 members, he said. Eventually, he became senior vice president of marketing for the entire company. But in January 1983, he was invited to help launch yet another HMO - this one a pilot project for the elderly, known as Senior Health Plan.

It was a joint venture of St. Paul-Ramsey Medical Center, Health Central Corp. and the Amherst Wilder Foundation, and Halvorson jumped at the offer to become its first president and chief executive officer. It was a chance to expand his HMO experience, and try out a new approach to deal with the special needs of the elderly.

There was one hitch: they needed approval from the federal government to run the pilot project, and a special waiver to enroll just Medicare patients. In general, Medicare required that HMO's offer a "mix" of patients - at least as many non-elderly as elderly patients. To break down that barrier, Halvorson spent about three months in Washington, lobbying everyone he could think of, from senators on down, to get approval.

By the summer of 1984, Halvorson and his staff had lined up about 3,000 Medicare patients for their new HMO. But in August, the government gave only half a loaf. It said yes to the pilot project in general, but no to the waiver.

In Halvorson's words, the government had "changed the rules." And as a result, Senior Health suddenly needed an infusion of new - and younger - customers.

To draw new customers, Halvorson and his staff designed new programs. Through Senior Health, he helped launch ComPlus, the first HMO plan for worker's compensation patients, and Ramsey Care, a government-funded health plan for the uninsured.

At the same time, he also took on a "second job" as head of HMO operations for Health Central, where he helped launch the first HMO in Jamaica.

Then, last July, he joined Group Health. He arrived at a time when the organization was trying to alter its image as a "pure" HMO - where all doctors are staff employees, and all participants must go to those doctors, with few exceptions.

"Group Health has to be more than what it has been," said Scroggins, the board chairman. "We will not essentially grow or be a significant player in the marketplace unless we offer other choices."

Like many of its competitors, Group Health had started branching out even before Halvorson came on board. In 1985, it started a joint venture with Prudential Insurance to offer a combination plan that allowed members to go outside the HMO - to any doctor of their choice - for an extra fee.

Halvorson, with his penchant for innovation, has spearheaded more changes. Group Health now has 35 health plans - some for the elderly, some for individuals, some for groups - and he says more changes are coming. "I think the biggest challenge," he says, "is to let the world know that we are as innovative and flexible as we are."

But the problems are far from over.

Group Health, the state leader in enrollment as recently as 1984, has dropped to third, after Physicians Health Plan and MedCenters. And enrollment has continued to drop slightly for the past two years. In addition, observers say Group Health has some image problems to overcome.

"They have an image problem that probably unfairly goes back to the early days, that they didn't attract the range of specialists and quality of physicians that they needed," said Rice, of Health Central. "I think they've done that recently, but . . . that's one of the challenges: overcoming the images in the mind of the consumer."

Halvorson, for his part, is trying to turn the quality issue to his advantage. "You have to go beyond saying `we're a better quality place,' because everybody says that," he said.

He argues that an HMO such as Group Health can actually monitor the quality of care more effectively than anyone else. Because it has its own staff of physicians, it's easier to keep tabs on who's doing what, and which kinds of treatments work better than others. As proof, he points to Group Health's preterm birth program. The HMO has run full-page newspaper ads bragging about the success of its program, which has reduced the number of babies born prematurely, thus reducing their risk of illness or death.

Financially, meanwhile, the company is "extremely healthy," he said. Like all HMOs in Minnesota, Group Health is nonprofit corporation. But its cash reserves for future development have grown to an estimated $36 million. At the same time, however, the amount of excess revenue left after expenses (the nonprofit equivalent of profit) dropped from $7.7 million in 1984 to $2.8 million in 1985. The excess revenues are used to pay for new equipment, staff increases and other expenses. And a company spokeswoman attributed the recent drop primarily to the opening of three new clinics.

Halvorson says he intends to continue expanding the HMO's network of doctors and clinics, some of whom are under contract, rather than on staff. "Basically, our biggest goal is to have good, solid growth."

George Halvorson Born/Jan 28, 1947, Fargo, N.D. Family/Wife Mary. Sons Jonathan, 17, and Seth, 15. Expecting third child in April. Home/St. Paul. Career/1968-1982, Blue Cross and Blue Shield of Minnesota, assistant director of public relations; corporate planner; vice president and senior vice president, marketing. 1983-1986, Senior Health Plan Inc., president and chief executive officer. July, 1986, Group Health Inc., president and chief executive officer. Hobbies/Windsurfing, sailing, writing, inventing.
Copyright (c) 1987, 2001 Star Tribune: Newspaper of the Twin Cities