HMOs post mounting losses in 3rd quarter 1999

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The Weiss report shows 186 HMOs lost money, with more nonprofit HMOs posting losses|ret||ret||tab|

According to the latest report from Weiss Ratings Inc., HMO profits are continuing their downward plunge.|ret||ret||tab|

Weiss announced in an April 26 release that HMO profits dropped to $68.6 million in the third quarter of 1999, down from $97.5 million in the second quarter and $274 million in the first quarter of last year. Overall, 47 percent of HMOs lost money, Weiss Ratings stated.|ret||ret||tab|

The breadth of HMO losses also continued to increase. While previous losses were isolated to small HMOs with fewer than 100,000 members, third-quarter losses were reported for all size groups except the largest HMOs with 500,000 members or more.|ret||ret||tab|

"We've already begun to see an alarming number of HMO failures," said Martin D. Weiss, PhD, chairman of Weiss Ratings, in the release. "This continuing spreading flow of red ink implies a still broader HMO shake-out in the making, potentially disrupting millions of consumers. Fortunately, there are still quite a few financially healthy HMOs to choose from."|ret||ret||tab|

For-profit vs. nonprofit HMOs |ret||ret||tab|

Looking strictly at the aggreggate numbers, Weiss attributes part of the problem to the not-for-profit structure of some HMOs HMOs, identified by Weiss as for-profit, earned a total of $177.4 million while 93 nonprofit plans lost a total of $57.8 million during the first nine months of 1999. However, in both groups, approximately half of the HMOs lost money 144 of the for-profit companies and 42 of the nonprofit companies.|ret||ret||tab|

"There is a widespread problem in this industry, cutting across every sector and region. For many of the surviving companies, it portends sharp premium increases, the redesigning of benefits, or some combination of both," Weiss said in the release.|ret||ret||tab|

Missouri results |ret||ret||tab|

In Missouri, the strongest HMOs rated are United Healthcare of the Midwest, which received a B rating; Exclusive Healthcare Inc. with a B rating; Good Health HMO Inc. with a B rating; and Healthlink HMO Inc. with a B- rating.|ret||ret||tab|

The weakest HMOs in Missouri are Community Health Plan with an E rating; Alliance for Community Health with an E rating; Missouri Advantage LLC with an E+ rating; Health Partners of the Midwest with an E+ rating; and Mercy Health Plans of Missouri with a D- rating. It was noted that Sept. 30 1999 data for Alliance for Community Health was not available.|ret||ret||tab|

Weiss Ratings analyzes a company's risk-adjusted capital, five-year historical profitability, liquidity and stability. The latter category combines a series of factors including asset growth, premium growth, strength of affiliate companies and risk diversification.|ret||ret||tab|

Weiss issues safety ratings on more than 16,000 financial institutions, including HMOs, life and health insurers, Blue Cross Blue Shield plans, property and casualty insurers, banks and brokers. Weiss also rates the risk-adjusted performance of more than 10,000 mutual funds. Weiss receives no compensation from the companies it rates. Its revenues are derived strictly from sales of its products to consumers, businesses and libraries.[[In-content Ad]]