Early Adopter

During an interview conducted at his home six months into his retirement, it became clear that John Hogan remains closely attuned to health care trends, market dynamics and the workings of state government.

Those areas commanded his attention throughout his 44 years as the CEO at Capital Health Plan (CHP), a primary care-focused, not-for-profit health maintenance organization (HMO) headquartered in Tallahassee, and for years prior to his arrival in Florida.

Hogan was looking forward to a speaking engagement at the Westminster Oaks retirement community, where he would discuss the latest changes affecting Medicare. And, in conversation, he was as attuned to the future of health care and health insurance as he was to its evolution.

He can’t take his eye off that ball.

“We are always at risk of trying to perfect a system that is not what future demographics are going to need,” Hogan said. “Birth rates and fertility rates in the U.S. are at record lows. We have a growing number of seniors and very senior seniors. Persons aged 85 and above is the most rapidly growing segment of the population in Florida.”

Hogan, who headed south from Georgia in 1978, remembers when less than 10% of the population in Tallahassee was made up of seniors.

“Those days are long gone,” he said. “Statewide, 21% of the population is over 65. My mother-in-law is 103 and a half. Ten years ago, CHP didn’t have a single member over the age of 100; when I retired, we had 20. That trend is going to continue. So, what should the health care delivery system look like 10 or 20 years from now? Are we really thinking about that enough? Chronic illnesses that don’t get cured but are managed for years are expensive.”

Hogan is pleased that the state Legislature has worked toward creating more residencies in Florida, recognizing that physicians tend to remain in the area where they complete their postdoctoral work.    

A Virginia native, Hogan completed undergraduate studies at the University of North Carolina in Chapel Hill — UNC basketball has been an “affliction” for him ever since, he said — and earned a master’s degree in regional planning at the University of Virginia.

While in graduate school, he worked with the School of Health Services Research at the UVA Medical School and was exposed to a “coming thing,” HMOs. Few were located in the eastern and southern U.S. at the time, and Hogan read all that he could about them.

He had, he said, the “HMO bug.”

As Hogan was graduating from UVA in 1976, a group of health care professionals in Tallahassee was deciding not to go forward with an HMO that had tentatively been named the Big Bend Health Plan. The group included Tallahassee Memorial Hospital administrator M.T. Mustian and physician members of the Capital Medical Society.

Would the community lend an HMO enough support to make it viable? Would the medical community embrace the idea?

“They concluded that the time wasn’t right,” Hogan said. “The area was too small. Physicians felt that it posed a competitive threat to the way they preferred to practice.”

But the idea would surface again in Tallahassee, and this time, Hogan would be in the mix.

Post UVA, Hogan worked for regional health systems agencies in Brunswick and then Albany, Georgia. The jobs aligned with his master’s degree but not with what he truly wanted to do.

Versus planning and development, his greater interest was in bringing about market alternatives to the traditional fee-for-service approach to health care. He wanted to discover whether prepaid health plans could work from the standpoints of quality and affordability of care.

When Hogan arrived in Tallahassee in 1978, Capital Health Plan, as yet unnamed, was in development. Maybe this time, the idea would win. The capital city had a vast number of state employees and, if state government were open to an HMO, that might be enough to get one started on a path to sustainability.

Hogan occupied a pre-operational rented office on Office Plaza Drive in Tallahassee at the start of his Capital Health Plan career. Photo courtesy of Capital Health Plan

At the time, Hogan said, the federal government viewed membership of at least 25,000 as an HMO viability threshold. The Tallahassee metro area numbered only about 250,000 people. Was it reasonable to think that a start-up HMO could attract 10% of the population as members?

“We argued that it was not the aggregate number of people that mattered, but who made up the population,” Hogan said. “You have a lot of university folks here, you have a lot of state employees, you have supportive employers in city and county governments and school districts. We felt that we could get to 25,000.”

It did, in 2½ months.

Today, CHP has 135,000 members in a nine-county area: Calhoun, Franklin, Gadsden, Jefferson, Leon, Liberty, Madison, Taylor and Wakulla.

“The key thing in secondary markets — and I don’t care if you are starting a health plan or a restaurant — is to do an outstanding job with the initial risk-takers who give you a chance to show them that you are a good value to them as consumers,” Hogan said.

He said CHP’s first medical director, Dr. Bud Huber, stressed the importance of treating early adopters with courtesy and respect, delivering quality clinical care and generating good word-of-mouth.

The early adopters hung around, and 40-plus years later, “CHP has never had a disenrollment rate of more than 2% in a year, and usually it’s around 1%,” Hogan said. In 2023, the National Committee for Quality Assurance awarded CHP a perfect five-star rating for “member rating of the plan” and “satisfaction with care.”

Hogan believes there is a strong correlation between such satisfaction and local accountability. The plans and providers who are going to do best, he said, are those that assume accountability for the quality of care and service — and for financial operations.

John Hogan addresses a press event held to kick off the Capital Health Plan Champions Club, established in 2007 to promote physical fitness in children. Photo courtesy of Capital Health Plan

“Despite the development of telehealth and the fact that the person reading your X-ray may be in India, the vast majority of health care is still a personal, locally delivered service,” Hogan said. “But for most people who have national or statewide or regional or major carrier health plans, bills are processed in Atlanta or Oklahoma City or another faraway place, so when there’s a problem that comes up with service delivery, a claim or anything else, you’re usually calling a 1-800 number.”

There are downsides to the corporatization of health care, Hogan said, acknowledging that CHP employs physicians, but it has become nigh unto impossible for doctors to sustain solo or small-group practices.

“Things have gotten too big,” he said. “The government pays for x percent of a practice. Big health plans pay for x percent. And you don’t have any leverage in negotiating with these folks. You need to be part of something larger.”

In all of this, Hogan said, there are two fundamental and fundamentally different approaches to health care: one that relies on drumming up business and the other that calculates risks, lives within a budget and emphasizes health maintenance.

Optimally, a service delivery system will achieve better health for the population, better health care and sustainable affordability — so-called triple-aim outcomes. Approaching that goal will require continuing programs of refinement and experimentation.

Hogan, at this point, will leave that trial and error to others. He has been succeeded at CHP by Sabin Bass, who had served as the plan’s executive vice president and chief financial officer.

A basketball player as a younger man, Hogan switched to golf, an activity that creeping arthritis has interfered with. At 6 feet, 6 inches tall, he’s got the wingspan for pickleball. Maybe he will give that a try, he said.

For sure, he will keep his eye on the health care ball.