CONTACT:
Allan Baumgarten, +1-952-925-9121, or cell +1-952-212-8589
Web site: http://www.allanbaumgarten.com/
HMOS and Hospitals Both Enjoy Strong Net Income
MILWAUKEE and MADISON, Wis., March 19 /PRNewswire/ — HMO enrollment in Wisconsin dropped below 1.6 million for the first time since 1999 as employers, concerned about high premiums, sought other health benefit options. HMOs had strong net income in 2003 after major increases in premiums in 2001 and 2002. Hospital in southeast Wisconsin reported net income of $223 million, an average of 7.3% of patient care revenues.
These findings and others are contained in Wisconsin Managed Care Review 2003, Allan Baumgarten’s first annual report analyzing trends and issues in Wisconsin health markets. The report was released here today. Baumgarten is an independent analyst and consultant on health policy and finance and he also publishes annual market reports in eight other states: California, Colorado, Florida, Illinois, Michigan, Minnesota, Ohio and Texas.
In his report, Baumgarten finds:
* Wisconsin HMOs posted strong net income in the first half of 2003.
Wisconsin HMOs had profits of $63.6 million (2.9% of revenues) in the first half of 2003. In 2002, they had net income of $63.2 million (1.6% of revenues), and were profitable in all lines of business, including Medicare and Medicaid.
* HMO premiums have increased on average by 20% and 15% in the past two
years, leading employers to look at other health benefit options.
In 2002, HMOs collected an average of $219.63 in premium revenue per commercial member per month. That is an increase of 14.9% from $191.17 in 2001. While these increases may be more moderate in 2003, there are still likely to be more than 10%. These sharp increases have caused employers to look for other health benefit options, including PPOs and may also influence their decision to add employees in Wisconsin. Average premium revenues are higher in Wisconsin than in neighboring states like Illinois ($179.02 per member per month), Michigan ($192.12) and Minnesota ($208.97).
* Enrollment in Wisconsin HMOs has dropped in the last 18 months.
After peaking at 1.6 million enrollees in 2001, some HMOs have seen their enrollment decline. As of June 2003, there were 57,000 fewer HMO members in the state. CompCare, the HMO of Blue Cross Blue Shield United of Wisconsin, lost about 88,000 enrollees in employer groups. Health plans like Humana and United HealthCare (the largest HMO in the state) have been focusing on their other health plan arrangements, including PPOs. At the same time, enrollment in Medicaid and BadgerCare HMOs has increased.
* Hospitals in the southeast Wisconsin area reported strong net income in
2002.
Inpatient hospital costs are an important driver of the increase in health care costs. The hospitals in southeast Wisconsin, most of which are organized in integrated systems, had net income of $222.8 million in 2002, which was 7.3% of net patient care revenue. In the Madison area, hospitals had similar results, with net income of 7.0%.
Excerpts from the report, including the “Wisconsin HMOs at a Glance” page can be viewed at http://www.allanbaumgarten.com/ . Copies of Wisconsin Managed Care Review 2003 can be ordered from Allan Baumgarten for $135.00. Orders can be placed at his website or by calling 952/925-9121, faxing 952/925-9341 or sending E-mail to: Baumg010@tc.umn.edu .
