SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) February 1, 2000
-------------------------------
Health Risk Management, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Minnesota
(State of Other Jurisdiction of Incorporation)
0-18902 41-1407407
(Commission File Number) (I.R.S. Employer Identification No.)
10900 Hampshire Avenue S.
Minneapolis, Minnesota 55438
(Address of Principal Executive Offices) (Zip Code)
(612) 829-3500
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Information.
On February 1, 1999, Health Risk Management, Inc. (the "Registrant"),
through its subsidiary, HRM Health Plans (PA), Inc. ("HRMPA"), acquired from
Hamilton Health Center, Inc. (the "Seller") all of the outstanding stock of
Pennsylvania HealthMATE, Inc. ("HealthMATE") for nominal cash and the assumption
of HealthMATE liabilities in excess of assets of approximately $2.5 million. The
amount of the consideration was determined by negotiation between the Registrant
and the Seller.
HealthMATE is an Integrated Delivery System that serves the Medicaid
population in central Pennsylvania. Since April 1988 it has operated a health
plan serving in excess of 18,000 voluntarily enrolled Medicaid recipients under
a contract with the Commonwealth of Pennsylvania held by PhilCare Health
Systems, Inc., an HMO. The Registrant's acquisition included the assignment of
such contract to HRMPA by PhilCare.
A copy of the press release issued by the Registrant on February 4, 2000
relating to the acquisition has been filed as an exhibit to this Report and is
incorporated herein by reference. The foregoing summary is qualified in its
entirety by reference to such exhibit.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired:
Not required.
(b) Pro Forma Financial Information:
Not required.
(c) Exhibits:
See Exhibit Index on page following Signatures.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HEALTH RISK MANAGEMENT, INC.
Date: February 11 , 2000 By /s/ Thomas P. Clark
Thomas P. Clark
Senior Vice President, Finance
and Chief Financial Officer
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
EXHIBIT INDEX
to
FORM 8-K
HEALTH RISK MANAGEMENT, INC.
Exhibit Number Exhibit Description
99 Press release dated February 4, 2000
Exhibit 99
FOR IMMEDIATE RELEASE
HRM Health Plans (PA), Inc.
Completes Acquisition of HealthMATE in Harrisburg, Pennsylvania
HARRISBURG, PA. February 4, 2000 . . . HRM Health Plans (PA), Inc. (HRM PA), a
subsidiary of Health Risk Management, Inc. (Nasdaq: HRMI) announced the
completion of its acquisition of Pennsylvania HealthMATE, Inc., an Integrated
Delivery System that serves the Medicaid population in central Pennsylvania. The
acquisition was effective February 1, 2000. Prior to the acquisition, HealthMATE
was a wholly-owned subsidiary of Hamilton Health Center, Inc., in Harrisburg,
Pennsylvania. This acquisition also includes agreements or approvals with state
agencies and other parties.
Since April 1998, HealthMATE has operated a health plan that has served in
excess of 18,000 voluntarily enrolled Medicaid recipients in Central
Pennsylvania under a contract with the Commonwealth of Pennsylvania held by
PhilCare Health Systems, Inc., an HMO.
Under the terms of the acquisition agreements:
(1) HealthMATE has become a wholly-owned subsidiary of HRM PA;
(2) PhilCare has assigned its contract with the Commonwealth, as well as its
provider contracts, to HRMPA. (PhilCare's contract with the Commonwealth
expires March 31, 2000.);
(3) The Department of Health has agreed to expand HRM PA's service area to
include the six central counties served by HealthMATE. This expansion adds
to HRM PA's existing coverage in the five counties in southeastern
Pennsylvania;
(4) The Department of Public Welfare has agreed to the assignment of the
contract from PhilCare HRM PA and agreed to a new contract with HRM PA
effective April 1, 2000.
(5) Hamilton Health Center has transferred operations and ownership to HRM PA,
but continues its relationship with HealthMATE and HRM PA.
HRM PA assumed ownership of HealthMATE by assuming net liabilities in excess of
assets of approximately $2.5 million as of January 31, 2000. The annual premium
revenue for this transaction is expected to exceed $32 million. Because HRM's
claim and care management systems, reporting capabilities and other required
procedures are already functioning in southeastern Pennsylvania for HRM PA's
OakTree Heath Plan, HRMI expects that this transaction will be accretive for
HRMI's quarter ending March 31, 2000.
Gary McIlroy, M.D., HRM PA chairman and CEO, said: "We are very pleased to have
finalized these transactions. Plan members are being notified that no changes in
health plan benefits are expected, and affiliated physicians, hospitals and
clinics are being informed that we expect our provider network to remain intact.
The provision of quality care and the overall satisfaction of plan members and
providers throughout the area served by HealthMATE are our top priorities."
<PAGE>
Commenting on the acquisition, Valerie J. Payne, chairperson of Hamilton Health
Center, said: "HealthMATE has experienced the same difficulties as other small
plans in providing quality services and managing expenditures in an environment
of dramatic increases in health care costs. We look forward to a long and
productive relationship with HRM PA."
HealthMATE, which was founded by Hamilton Health Center, intends to preserve its
local approach to providing health care services. Dr. McIlroy said "We want to
ensure that our members continue to have access to the providers that have
served this population for more than 25 years. In particular, we want to
continue our working relationship with Hamilton and its affiliated facilities,
which include two school-based clinics."
Dr. McIlroy added, "We appreciate the cooperation provided by the Commonwealth
of Pennsylvania agencies to complete this business transaction. We expect this
change in ownership will ensure continuity of care for our members and
continuation of our provider relationships. This transaction, which has been
approved by the Pennsylvania Department of Public Welfare, the Department of
Insurance and the Department of Health, brings HealthMATE the stability that is
critical to its current operations and future growth. This stability is
important as HRM PA makes plans to expand into other counties in the
Lehigh-Capital Zone in response to the Commonwealth's anticipated Request for
Proposal as the Commonwealth expands its HealthChoices Program into additional
counties. Currently, only 55,000 of the approximately 170,000 eligible Medicaid
recipients in the Lehigh-Capital Zone are enrolled in HMOs."
HRM PA also owns and operates OakTree Health Plan, a Medicaid plan that
participates in the Commonwealth's HealthChoices Program and which serves 59,000
members in southeastern Pennsylvania.
HRM, based in Minneapolis, delivers evidence-based solutions to the managed care
and indemnity marketplaces. Solutions for managed care organizations that are at
financial risk include a suite of QualityFIRST(R) evidence-based clinical
decision support and benchmarking systems for medical risk management. HRM also
provides outsourcing and risk sharing arrangements for health plans using HRM's
electronically integrated health plan management services. More than 10 million
health plan members benefit from QualityFIRST(R) services. In addition, HRM
provides integrated health plan solutions for more than two million members of
CarePASS(R) USA - Your Passport to HealTHsm, a nationwide managed indemnity
health plan.
Forward looking statements in this news release reflected as expectations,
plans, prospects or future estimates are subject to the risks and the
uncertainties present in the Company's business and the competitive health care
marketplace where clients and vendors commonly experience mergers or
acquisitions, reconciliations, volume fluctuations, participant enrollment
fluctuations, changes in member mix or utilization levels, fixed price
contracts, contract disputes, contract modifications, contract renewals and
non-renewals, various business reasons for delaying contract closings, and the
operational challenges of matching case volume with optimum staffing, having
fully trained staff, having computer and telephonic supported operations, and
managing turnover of key employees and outsourced services to performance
standards. While occurrences of these risks, and others periodically detailed in
the Company's SEC reports, cannot be predicted exactly, such occurrences can be
expected to have an impact on HRM's anticipated level of revenue growth or
profitability.
