FOUNDATION HEALTH: Will Pull Out Of Medicare Markets On Reports Of Second-Quarter Losses
As expected, Foundation Health Systems Inc. announced yesterday that its "second-quarter profit fell 43%," Bloomberg News/Los Angeles Times reports. The Woodland Hills-based company said its "[e]arnings were hurt by a greater-than-expected increase in medical costs of its Medicare plans" in the northeastern section of the country. As a result, said Foundation CEO and President Jay Gellert, "the company will pull out of Medicare programs in 10 rural Northern California counties and move to turn around unprofitable programs in the Northeast," which are doing worse than expected. "We cannot tolerate unprofitable Medicare business," he said. Gellert also said the company is attempting to make its remaining Medicare programs profitable by raising premiums and cutting back benefits starting January 1. However, Foundation "will reduce the scope of those cutbacks if it can persuade doctors to sign contracts to treat its patients in exchange for fixed monthly payments," Gellert said. Foundation's second-quarter profit fell to $31.3 million, down from $54.8 million a year ago. After a charge of $30 million, the company's "net income was $956,000 or 1 cent" (8/12).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.