HMOs: Profits Plunge 59% in 1999’s Second Quarter
A new analysis of financial data for 516 HMOs shows that second quarter earnings for 1999 dropped by 59% to $97.5 million. The earnings dive erases first-quarter gains and indicates the "possibility of continuing financial difficulties for the industry," Reuters reports. According to the Weiss Ratings Inc. analysis, losses for small HMOs with less than 100,000 members tripled from $51 million in the first quarter to $155 million in the second quarter. Medium-sized HMOs with 100,000 to 250,000 members lost $90 million after accruing a $2.5 million profit for the first quarter. Larger plans carrying a quarter-million to a half-million enrollees also saw profits decline from $23 million to $2.5 million. Only the largest plans -- those with over a half-millon members -- saw improvement in the second quarter. Weiss Ratings Chair Dr. Martin Weiss called the news "a big disappointment," noting that although "most industry analysts are claiming that HMOs have turned the corner," they are "looking entirely at the results of larger, publicly traded companies." Weiss Ratings Vice President Melissa Gannon explained, "It's still kind of shaky whether or not they're turning the corner" (Pallarito, 1/21).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.