Dental HMO Firm Moving to Anaheim : 110 in Safeguard Health Staff Will Be Transferred

Safeguard Health Enterprises Inc., a Whittier company that is pioneering a dental version of the popular health maintainance organization, said Wednesday that it will relocate its corporate headquarters to Anaheim early next month.

Housed in leased offices in Whittier since 1978, Safeguard has grown from about a dozen employees to 350. In all, 110 people will be involved in the move to Anaheim, where the company purchased a six-story, 60,000-square-foot building for $3.5 million. Safeguard, a spokesman said, plans to occupy four stories and lease out the other two floors.

Although results for the third quarter are not available, Safeguard had second-quarter earnings of $850,000, compared with $585,000 during the second quarter of 1984. Revenues for the three months were $12.4 million, compared with $7.9 million a year earlier.

With anticipated 1985 earnings of $3.8 million on projected revenues of $47 million to $49 million, the 11-year-old company is arguably the leader in a segment of the health-care industry for which industry analysts project rapid growth.

“Right now, they are the largest pure-play, publicly held dental HMO in the country,” said Susan Waldman, an analyst with San Francisco-based Robertson, Colman & Stephens. “We can expect to see more of these in the future.”

According to the spokesman for Safeguard, the company contracts with about 1,300 dental offices and operates 28 of its own in nine states. Plans to expand nationwide, however, call for the company’s patient base to grow from the present 650,000 to “near 900,000 by the end of 1986,” he said.

Unlike with standard dental insurance, patients participating in the Safeguard system visit dentists belonging to the plan.

In exchange for the employer’s monthly payment, usually part of a fringe-benefit package, patients have no deductible to pay and co-payments are usually small, according to the company spokesman. Treatment requiring laboratory work is usually 20% to 30% less expensive than under traditional dental plans, he added.

“If you are offered ‘Plan X’ and it costs $10 a month and it pays 80% of your medical costs, while you can get Safeguard for $8 a month and you don’t have to pay anything else, you as an employee are more likely to to go for the Safeguard plan,” Waldman said.

According to analysts, Safeguard will face increased competition in the future from established HMO providers and traditional insurance companies as they begin the shift toward prepaid dental plans.

“If you go around and talk to the HMOs and ask them what is in the wings, I think that more often than not, they are going to tell you they are planning to add dental HMOs,” said Larry Selwitz of Bateman Eichler, Hill Richards Inc. in Los Angeles. Such a move, he said, would be a “natural shift” that would allow the insurance company to “take advantage of an existing patient base.”

A spokesman for the company, whose dental plan operates in nine states, said the move will be completed during the weekend of Nov. 8 to avoid disrupting its business. “We should be open for business on Nov. 11,” the spokesman said. “We are a service business and most of that business is conducted by telephone, so we need to be operational as soon as possible.”