The company has new investors pumping in millions, industry sources say, and a larger board of directors to provide more expertise as Intercare expands into new services and other states.

After previously handling only workers' compensation insurance claims, Intercare's third-party-administration division has expanded into handling property-casualty and liability claims.

The company opened an office in Bellevue, Wash., in April to oversee the new work. Two more out-of-state offices are expected to follow within nine months, as the company pursues work in multiple states. The company opened the new office without yet having accounts to support it.

"We've built the cart without the horse," said Mike Ramser, president of Intercare's claims management and cost containment divisions.

Intercare also is expanding its workers' compensation claims handling and its cost-containment services outside of California. First up is Nevada, with Texas following sometime this year. Arizona might come next.

The third-party administration business generates the bulk of the company's revenue, and some industry observers figure it's the segment on which it should continue to focus and grow.

With the new efforts, Ramser predicts the company will double revenue within two years, reaching $150 million to $175 million within five years. The company expects to reach $55 million in revenue this year, after 2005 revenue of $36.7 million. At $175 million, the company might employ 1,100 workers, he said.

"We have a plan to grow the company very aggressively," Ramser said. "We want to become a regional powerhouse."

After that, the company would decide if it wants to try a nationwide push.

Intercare ranked No. 29 on the Business Journal's 2005 list of fastest-growing companies, based on 103 percent growth from 2002 to 2004.

"The caution would be as you expand you're covering your bases from an operational standpoint," said Tom Williams, head of InterWest Insurance Services Inc., one of the Sacramento area's largest property-casualty insurance brokerages.

Williams described Intercare founder and CEO Kevin Hamm as a bright entrepreneur and capable, but someone who is a better "starter than operator."

The one thing that continues to make some competitors and industry observers uncomfortable about Intercare is its close ties to Mainstay Business Solutions, a tribal-owned staffing company that until a resolution last year was battling the state over its sale of an alternative to workers' comp insurance. Intercare still handles Mainstay's claims.

The company faces plenty of hurdles as it expands, but its strategy has some merit, industry observers said.

The third-party administrator industry has numerous players, and it's a costly, people-intensive business with low margins. But the industry is consolidating, with national operators such as Sedgwick CMS Holdings Inc. gobbling up smaller companies.

As the market consolidates, third-party administration customers will be looking for options, said Leonard Russo, chief executive officer of Acclamation Insurance Management Services, a Sacramento-based third-party administrator that has 225 employees. Like Intercare, AIMS is growing and expanding into other states. The company has doubled revenue and its work force over the past couple years.

Some clients will want a larger third-party administrator with multiple locations across the country, such as Sedgwick. Others, particularly not-so-large clients, might prefer working with a smaller, regional third-party administrator. Intercare tries to set itself apart with lower case loads per claims adjuster, and attracting and retaining top people, Ramser said.

Money talk
Intercare's third-party administration service is known for its quality and "putting their money where their mouth is," said Jeff French, a 17-year industry veteran who joined the company in April to oversee the property-casualty and liability claims handling from Bellevue.

The new property-casualty and liability claims-handling operation will target mid-sized clients with accounts that generate $500,000 or less, Ramser said. These would be insurance carriers, self-insurance groups, self-insured companies, municipalities and other public entities. The initial focus will be on seven Western states.

Targeting the middle market, however, limits Intercare's potential, observers said, because there are fewer of those midsized entities that employ the services of a third-party administrator.

Expanding beyond just workers' comp claims handling makes sense, some observers said, because many clients prefer one-stop shopping. Larger administrators handle claims for multiple lines of insurance, but many other third-party administrators stick with only workers' comp. Workers' comp has a very different, complex regulatory environment.

Intercare will need to find talented people for its property-casualty and liability claims handling, Russo said. People in the industry rarely have expertise in both workers' comp and property-casualty.

Since the beginning of the year, the Roseville company has attracted some new capital and board expertise. Houston insurance executive Will Galtney and his investment group pumped an undisclosed amount into the company, and Galtney serves on the board. In January, the company expanded its board to seven people from three.

"I respect them," Russo said. "I wish them the best of luck."