Allina Health System and Connecticut-based Aetna announced Tuesday that an executive from South Carolina will serve as the first chief executive for their joint venture health insurance company.
Tom Lindquist has been on the job for a week, and previously served as president for the South Carolina public programs business at Molina Healthcare, a California-based carrier that operates Medicaid HMOs and sells individual market coverage.
Lindquist will be one of fewer than 10 employees at Allina Health and Aetna Insurance Company. The joint venture will draw on personnel at both parent companies, Lindquist said in an interview, so it doesn’t need to build up a large staff.
“Part of the structure of this [joint venture] is to limit administrative overhead, so we can really spend our money on the value that we hope to bring to the members here,” he said. “So, if we can minimize our administrative expense, we have more flexibility to really invest in that member experience, and be innovative and actually change the landscape.”
Minneapolis-based Allina announced in January 2017 that it was launching with Aetna a new health insurance company to sell coverage to large employer groups and Medicare beneficiaries, pending regulatory approval.
The startup company has received $4.55 million in capital contributions, according to a regulatory filing. David Kanihan, an Allina spokesman, said in an e-mail: “Both parent organizations have put up capital but we are not disclosing the percentages.”
The company’s headquarters is located in St. Louis Park. Allina-Aetna can start writing coverage for employer groups this spring, Lindquist said, and hopes to be in the state’s Medicare market for 2019 coverage.
Before joining Molina in 2013, Lindquist was president of a home care company in Texas and held leadership positions with Minnetonka-based UnitedHealthcare in Minnesota, Texas and Louisiana.
Earlier this month, the rating agency A.M. Best assigned a financial strength rating of A (excellent) to Allina Health and Aetna Insurance Company. Aetna is expected to incur operating losses in the near term, analysts with A.M. Best wrote in a report, but the startup company “is expected to exhibit steady profitable growth over the next several years.”
“The competitive advantage of Allina Health Aetna is tied to the ability of Aetna and Allina to integrate their resources and build effective operations, with a focus on the customer,” A.M. Best wrote.
“The marketplace in the Minneapolis area is becoming even more competitive, following the lift of a long-term ban on for-profit [HMO] carriers to operate in the state,” analysts wrote. “Such market conditions create the potential for irrational pricing and pressure on carriers.”
Aetna is one of the nation’s largest health insurers with 2017 earnings of $1.9 billion on $60.5 billion in revenue. In 2017, Allina posted $145.9 million in operating income on $4.1 billion in revenue.
Allina and Aetna are 50-50 partners in the joint venture.