HMO Merger likely To Affect Hal Riney And Lord, Dentsu

LOS ANGELES – The proposed merger of Health Net Inc. and QualMed Inc. will likely be a booster shot for Lord, Dentsu & Partners here and a bitter pill for Hal Riney & Partners/S.F. to swallow.
The details of the merger are yet to be completed, and QualMed officials said that it’s too early to speculate on advertising assignments. But in California, at least, Health Net will absorb QualMed’s operations, and that’s likely to add some $10 million in billings to Lord, Dentsu’s $15-20 million account.
Pueblo, Colo.-based QualMed’s 170,000 members in California ‘will be folded into Health Net, and we will take over their sales and marketing activity’ in the state, said Rita Duarte, vp/sales and marketing for Health Net. ‘Lord, Dentsu will continue to be our agency, and we will continue with the campaign we’ve been on for four years,’ she added.
Lord, Dentsu officials said the matter was ‘a client issue,’ and declined further comment.
Duarte’s emphatic nod toward Lord, Dentsu appears to spell bad news for Hall Riney, where the QualMed account was the first new business win for the agency in over a year. Riney expected $4 million in billings its first year on the account, and as much as $10 million the following year.
QualMed’s acting director of marketing Jim Baker said the two merger prospects have not discussed advertising issues. ‘Saying anything at this time is really speculative,’ he said.
It is possible HR&P could lose QualMed’s California business but continue working with the merged company in other states.
But HR&P executive cd Joe O’Neill conceded the merger probably means a full plate or no lunch at all from QualMed. ‘It’s either the loss of an account or the possibility of gaining a large one,’ he said.
Because the principals were still working through details of the merger and the QualMed name will likely be changed in the future, QualMed asked HR&P to halt work on the account.
Copyright Adweek L.P. (1993)