Small Columbus health insurer tries to take on the giants

Columbus-based SIHO Insurance Services is a small health insurer tackling the gargantuan challenge of growth in the employer-based benefits market in Indianapolis and across the state.

SIHO was founded in 1987 as a local health maintenance organization, or HMO, called the Southeastern Indiana Health Organization. It now goes by the simple moniker SIHO, and it is seeking wider geographic reach with a variety of products that include fully insured plans, third-party administration of employer plans and management of Medicare Advantage plans through its MyTruAdvantage unit.

“The organization over the years has done some really good stuff,” SIHO CEO John Sadtler said last week from SIHO’s new Indianapolis office near Community Hospital North. “But it’s been pretty quiet about it. … At some point in time, you’ve got to start to elevate your presence.”

National health insurers dominate Indiana’s employer-based market. SIHO is seeking to challenge them—and has some early wins. But the company faces significant hurdles against larger rivals and significant initial financial losses that SIHO says it expected when it launched its Medicare Advantage unit.

Indianapolis-based Elevance Health, which operates Anthem Blue Cross and Blue Shield in Indiana, and Minneapolis-based UnitedHealth Group maintain firm market control in the state, with 2023 large-employer market share of 68% and 18%, respectively, according to data from the Kaiser Family Foundation.

In the small-group employer market, typically two to 50 employees, Elevance held a 62% share in 2023, the latest year for which data was available. UnitedHealth Group had 19%.

SIHO, with about 210 employees, remains small. It has about 110,000 members and is projecting revenue of $135 million this year. But the company has gained traction.

The Indiana Chamber of Commerce-endorsed health plan for small businesses, called ChamberCare Health Alliance, will switch from Anthem to SIHO on Oct. 1, opening potential gains across the state.

SIHO also is the administrator for Community Health Network’s direct-to-employer plan with the city of Fishers.

This year, Fishers employees have paycheck deductions for health insurance premiums, and the city’s health care costs have been flat or decreased since 2022, when it switched exclusively to what’s called a narrow network, meaning employees have limited choices in where to get care.

Finding a niche

SIHO sees opportunity in targeting small to medium-size employers with plan designs that often offer narrow provider networks—which can include one or multiple health care systems—in return for better rates.

Indianapolis-based Business Furniture Corp., which does business as Business Furniture + Co., provides health coverage for about 200 employees and their dependents.

Suzanne Bentley, president and co-owner of Business Furniture, said the company decided to self-fund its plan—meaning the employer pays the employee’s medical bills and hires a third-party administrator to oversee the program—in an effort to better manage health care costs.

The company was facing a 15% premium increase if it stayed with its previous carrier, so it switched to SIHO. She said premiums stayed roughly flat. The key was accepting a slightly more narrow network of providers. Ascension St. Vincent, for example, was no longer in the company’s network.

Bentley said SIHO has “great service. We also picked them because they’re based in the Midwest. We like that about them. … We like the fact that we would be supporting a smaller organization similar to ourselves.”

SIHO is also helping Business Furniture look at tweaks to its plan, such as how to handle high-cost prescriptions, to save money, Bentley said.

The insurer is also marketing itself to school districts and municipalities. Existing customers include Bartholomew Consolidated School Corp. and Seymour Community Schools.

Haizhen Lin, an Indiana University Kelley School of Business professor of economics, said insurers like SIHO can bring good value to the right customers. “They should know their market niche,” said Lin, who chairs IU’s Department of Business Economics and Public Policy.

The Indiana Chamber of Commerce announced in July that it would end ties with Anthem Blue Cross and Blue Shield and go with SIHO as provider of the pooled health benefits plan it created for Hoosier small businesses.

The ChamberCare Health Alliance is what’s known as a multiple-employer welfare arrangement, which allows several employers to pool together for better coverage. The chamber’s plan offers group coverage to employers with two to 50 employees. It provides coverage for nearly 1,500 small businesses with a total of about 12,500 employees.

The change to SIHO, which takes effect on Oct. 1, follows a dispute between Anthem and the ChamberCare Trust—an organization that makes decisions on behalf of ChamberCare—over rates.

Lin said the Indiana Chamber move offers SIHO a good foundation to grow statewide, though she cautioned that the company will likely face challenges because of its limited size and resources.

But Sadtler, SIHO’s CEO, said communication and service are keys to its success. He said SIHO’s service teams are all Indiana-based and even at times take walk-in visitors with questions.

“It’s our ability to sit down and bring to the table the payer, the broker, the employer and the health system, and say, ‘OK, what are the issues, what are the concerns, and how do we put something together that works for everybody?’” he said.

Growing pains

SIHO, which a decade ago transitioned from a nonprofit to a for-profit organization, is owned by multiple health care systems: Columbus Regional Hospital, Innovative Healthcare Collaboration of Indiana (a joint venture between Community Health Network and Deaconess Health System) and Jackson County Schneck Medical Center.

The company lost $12.7 million last year on revenue of $73.5 million, according to its 2024 financial filing with the Indiana Department of Insurance. In 2023, SIHO lost $3.1 million on revenue of $57.4 million.

Sadtler said those losses were anticipated and isolated to the start-up and ramp-up costs of SIHO’s MyTruAdvantage Medicare Advantage business. Medicare Advantage startups, he said, “take five to seven years to reach full scale and become additive to earnings.”

He added that the revenue figure includes only the HMO portion of the business, not revenue from SIHO’s business as a third-party administrator.

Kosali Simon, professor in Indiana University Bloomington’s Paul H. O’Neill School of Public and Environmental Affairs, said a local insurer with close ties to hospitals working with employers to control health care costs holds great potential.

But she also cautioned that giant players like Elevance remain powerful because they have enormous scale and administrative resources.

“That claims administration is so complicated,” Simon said. “That’s why these big companies are able to do it. They’re doing it at scale.”

In fact, Elevance last year acquired Indiana University Health Plans, which had been the managed care unit of Indianapolis-based academic hospital system IU Health. At the time of the deal, IU Health Plans operated Medicare Advantage plans in 36 counties with 19,000 members and had 9,600 members with fully insured commercial plans through employers.

Dr. Patrick McGill, a family physician and chief transformation officer with Community Health, said SIHO faces challenging market forces. But he said Community, which holds a stake in the insurer, encouraged SIHO to establish its Indianapolis office for brand and relationship building.

McGill said he’s “confident that a provider-owned health insurance plan can differentiate themselves in the market and provide a level of service and a level of partnership that is different.

“Anytime you can offer choice to employers, to patients or consumers, that’s important.”•