HMO PROFITS: May Multiply Six-Fold In 1998, Study Says
Buoyed by premium hikes across the nation, the managed care industry will return to "modest profitability" to the tune of $2 billion in net 1999 revenue, predicts Corporate Research Group, Inc., in its new study, "Beyond the HMOs: The Outlook for Managed Care in 2001." Membership in managed care plans is expected to reach 76 million at the end of 1998 -- an 8% increase over 1997 -- laying the ground for a 15% revenue growth that will push the industry's gross to a projected $173 billion. Some predicted company revenues for 1999: United HealthCare, $17 billion, Aetna U.S. Healthcare, $14 billion; Cigna Life and Health, $12 billion; Kaiser Permanente, $14.6 billion.
Not So Rosy
Despite encouraging signs, the industry still suffers from the fallout of past years' poor financial performance. Mergers and acquisitions have seen a "sharp decline," with the value of merger activity plummeting from $9.9 billion in 1997 to $2.9 billion through the first 11 months of 1998. And though plans will continue to control costs and cut "money-losing Medicare or Medicaid plans," for some it will be to no avail -- the report "predicts that dozens of HMOs will go out of business by 2001." "Beyond HMOs" is available for $995.00 by mail order: Corporate Research Group, Inc., 524 North Ave., New Rochelle, NY 10801; or by phone: (914) 235-6000 (Corporate Research Group release, 12/9).