July 19, 1995 in Nation/World

Jacot To Retire As Ceo Of Medical Service Corp. Veteran Executive Calls For Change In Local Health Care Community

By The Spokesman-Review

Fred Jacot, the outspoken head of the Inland Northwest’s dominant medical insurer for 13 years, will retire Sept. 30.

Prior to his 28 years at Medical Service Corp. of Eastern Washington, he was an executive at Deaconess Medical Center.

Jacot said a search for his successor is under way, and the new chief executive officer should be known by the time he vacates his office in the Medical Service Building on East Sprague.

Premera, the affiliation MSC formed last year with Blue Cross of Washington and Alaska, is conducting the interviews, he said.

The 57-year-old executive talked candidly Tuesday about the substantial changes he said must be made in the Spokane health care community.

Hospital costs are far too high, Jacot said, and insurers and their clients can no longer pay for excessive capacity.

He said average Spokane hospital bed occupancy was 50 percent in 1994. Yet profits almost doubled from the prior year, to $29 million.

“There’s no competition,” Jacot said. The attitude is “Whatever my cost is, my price is.”

He said MSC, which provides medical coverage for more than 40 percent of Spokane’s population, has moved gingerly toward restructuring its own insurance plans to encourage more cost-conscious choices by consumers.

“You don’t want to shake the confidence of your existing marketplace,” Jacot said. “Timing is everything.”

He said increasing numbers of MSC clients will gradually be shifted toward managed care programs as premiums for more traditional fee-for-service and preferred-provider organization plans are raised to reflect the greater service usage by those who buy them.

MSC clients become hospital inpatients at the rate of 260 days a year per 1,000. A good managed health care system can reduce that to less than 200 with little, if any, reduction in the quality of care, Jacot said.

He said a sure sign of the industry’s direction is the nature of the new entrants in the local health insurance market. All are managed care programs, he said.

Nationally, he said, care providers are being squeezed on two sides.

Major corporations like IBM are forming insurance-buying pools in order to get the best possible price.

And investors in health management organizations want them to maximize profitability.

Jacot said some observers predict there will be 400,000 fewer hospital beds in the United States as institutions respond to these pressures.

“You have to deal with the efficiencies of the system,” Jacot said, adding that Spokane has been slow to adjust to the changes taking place elsewhere in the country.

For himself, Jacot said he will remain active in the community, with a seat on the Spokane Valley Chamber of Commerce board of directors a likelihood.

The St. Maries native has previously served on the boards of the United Way, Spokane Area Economic Development Council, Spokane Area Chamber of Commerce and Washington State University-Spokane.

He was also on the President’s Council of Eastern Washington University.

Jacot, whose office is covered with prints of C.M. Russell cowboy paintings and pictures of his grandchildren, said he is retiring to spend more time with his family.

The timing was dictated by the upcoming changes, which he said required a three- to five-year commitment he was reluctant to make.

“If you want to find me, call 1-800-FSH-BOAT,” he said.

, DataTimes

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