FOUNDATION HEALTH: Premium Hikes, Cost Controls Boost Profits
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Foundation Health Systems Inc., one of the state's largest insurers, yesterday announced that its third-quarter profits rose 27%, attributing the windfall to additional customers, higher premiums and "controlled costs,"
Bloomberg News/Los Angeles Times reports. The Woodland Hills-based insurer's net income rose from $35.1 million last year to $44.6 million, and its shares jumped seven cents to 36 cents a share, exceeding analysts' original expectations of 34 cents a share. Revenue also climbed 6.1% to $2.29 billion, up from last year's $2.16 billion. Foundation has raised premiums for employer health plans by 11.5% since last year. Meanwhile, health care costs rose 5.3%, and prescription drug costs climbed 10%. The insurer reported that its medical loss ratio -- "the portion of every premium dollar that pays for medical costs" -- rose to 85.3% from last year's 84.9%, while administrative costs fell about 3.4%. Greg Crawford, an analyst at Fox-Pitt, Kelton Inc., said, "Last quarter, we saw a lot of the changes they've made start to grip" (Bloomberg News/Los Angeles Times, 11/2).