Peter Karmanos Jr., CEO of Compuware Corp., said on Nov. 7 that his company's Covisint unit submitted the proposal to GM. He revealed the information during a conference in New York. Compuware bought Co-visint for $7 million in 2004.
Covisint CEO Bob Paul said during the conference that the savings would come by making health care more manageable through more efficient information-sharing among private care physicians, hospital networks and insurance companies via a secure network.
The network would be compliant with the Health Insurance Portability and Accountability Act. The potential is to provide real-time information about health care costs to the company, Paul said.
Crain's Detroit Business, a sister publication of Automotive News, did not attend the conference but listened to the comments in an audiotape. GM confirmed the proposal.
Evaluation under way
GM spokeswoman Carey Osmundson said that GM had not had a chance to evaluate the proposal.
"We are certainly going to review it and will know something at a later date," she said.
In a written statement, Karmanos objected to Crain's Detroit Business' reporting the figure that he used during the conference.
"The projection that Compuware discussed remains exactly that - a projection based on government and industry data to form a basis of discussions with our customer," the statement said.
Covisint was created in 2000 by the Big 3. They had hoped to create an online trade exchange that would link suppliers and automakers. Paul said the companies poured $400 million into developing the technology. But Covisint foundered as suppliers questioned its value.
The trade exchange part of Co-visint's original business was sold to FreeMarkets Inc., of Pittsburgh, in January 2004. Terms were not disclosed.
Compuware bought Covisint's remaining assets in March 2004. Co-visint sells in three areas: messaging and Web services; identity security; and portal platforms, which are highly secure, custom-made networks. Much of the technology was developed before Compuware bought Covisint.
Since being purchased by Compuware, Covisint has been trying to sell in other markets, such as health care and financial.
Paul said during the presentation that studies from the federal government indicate that 30 percent of health care costs in the United States could be saved by consolidating information and improving the flow of communication among the entities involved in providing health care.
"For the first time in a long time, you're seeing these corporations actually proactively invest in health care information technology - giving it to the providers, to the hospital networks, the primary care physicians and everybody else - because they know it's going to have an impact downstream on overall health care costs," Paul said at the conference.
GM has made cutting health care costs a priority after losing nearly $4 billion this year. GM and the UAW agreed to a deal on Oct. 17 in which $1 billion in health care costs would be cut annually.