PacifiCare, Compaq Team for Seniors Web Site
PacifiCare Health Services Inc., which said last week it would review its dominant role in providing Medicare managed-care plans, said Tuesday that it is teaming with Compaq Computer Corp. to launch an Internet company designed for seniors.
The Santa Ana health care company, the nation’s largest operator of Medicare health maintenance organizations, will contribute $5 million in cash and assets for the new company, called SeniorCo, which is based in Irvine. Compaq will put in $14 million in cash.
The companies did not disclose how their stakes in the new venture are divided, but PacifiCare has controlling interest, despite its lower cash input.
SeniorCo has acquired an existing Web site called Senior.com, which offers electronic commerce as well as information on health, faiths, travel, financial services, news and entertainment.
As a major player in senior health care, the company needs to have a significant presence on the Internet, said Alan Hoops, PacifiCare’s chief executive. The company covers 1.1 million seniors in its Secure Horizons USA Medicare HMO and 3 million members in its commercial plans.
“Through crossover advertising opportunities, we expect to gain brand visibility,” said Hoops, who is scheduled to step down from his job soon. “Over time, we expect that this brand awareness will give us access to the senior market that we wouldn’t be able to achieve efficiently otherwise.”
Both investors will have a major presence on the expanded Web site, which soon will offer a direct link to PacifiCare’s Web site and will include an online store that will carry Compaq products.
Senior.com also is expected to generate revenue for PacifiCare and Compaq through online advertising, commissions and marketing fees from other businesses that pay to include links to their Web sites.
“It’s a good investment for us, because it gives us very quick access to a market that we don’t really have any significant presence in through the Internet,” said Arch Currid, a spokesman for Houston-based Compaq.
He said his company’s investment is greater than PacifiCare’s because “it takes a little more of an investment from a company like Compaq to get some brand recognition than it does for a company like PacifiCare.”
Industry analyst David H. Shove said the move isn’t surprising since PacifiCare has been “pretty Internet friendly” for a managed care company.
“Their own Web site has won a couple of awards, and this is just an extension of that,” said Shove of Prudential Securities in New York. “I think it’s a positive move, because seniors have high usage of the Internet and [PacifiCare] is a major senior supplier.”
Shove said any service that makes customers happy and provides extra exposure “will improve your bottom line.”
Seniors are “starting to warm up to the technology” and are going online at a higher rate than any other segment of society, Currid said.
More than 15% of the 37 million U.S. residents older than 65 are surfing the Internet. Some estimate that 70% of seniors will be using the Internet by 2010, said SeniorCo’s new president, Craig Schub.
Schub, the former president of Secure Horizons, said he expects to add to a staff of 20 employees, which includes six PacifiCare employees. Tom Poole, who founded Senior.com in 1985, remains a director on the board of the new company.
Currid said he doesn’t believe Senior.com will be competing with the more established Web site of the American Assn. of Retired Persons, which currently offers similar information to older Web surfers.
“AARP is a household word and a good source of reference information, but they are very large,” Currid said. Senior.com, he said, will be more flexible in its ability to change Web content and offerings.
