HMOs: Red Ink Continued In 1997 For Some
One-third of California's HMOs lost money in 1997, according to the sixth annual survey by Healthcare Databank, "a Sonoma-based firm that tracks the health care industry." The Contra Costa Times reports that the biggest loser out of all California plans was Foundation Health, which lost $22 million on revenue of $1 billion. Health Plan of the Redwoods, Prudential's PruCare, Omni Health Plan and Maxicare also lost money. "Despite posting a stunning nationwide loss of $270 million last year, Kaiser Permanente" earned $9 million in its California operations on revenue of $9 billion. Some HMOs, such as PruCare, have re-strategized for this year. PruCare has "restructured its administration, laid off 37% of its staff and focused on selling more policies in the small business sector." Many HMOs are planning to raise premiums by as much as 13% or are planning to pull out of unprofitable markets. Among the top profit-making HMOs in 1997 were Blue Cross of California, Health Net and PacifiCare. The Contra Costa Times notes that while many California businesses took a big hit, the state's HMOs still did better than those in many other states, where it was common for over half to lose money, according to Joseph Coyne, CEO of Healthcare Databank (Appleby, 7/31).
Kaiser Reports Losses For Second-Quarter
In related news, the Bloomberg News/Los Angeles Times reports that Kaiser reported an operating loss of $61 million for the second-quarter on revenues of $4.2 billion. Kaiser could not absorb all of its new customers in California, and had to pay "for them to be treated elsewhere." The HMO disclosed, however, that "investment and other gains totaling $63 million ... offset its operating losses and brought net income for the quarter to $2 million" (7/31). The Contra Costa Times reports that Kaiser lost $39 million in California, down from a first-quarter loss of $96 million (7/31).