Health Plans Post Strong Results For 2005
03/02/2006
The region's nonprofit health plans reported strong overall results for 2005, with most posting improved profits.
Market leader Blue Cross Blue Shield of Massachusetts, the largest insurer with 2.8 million members, said it earned $264.8 million after taking in premiums of $5.6 billion for its traditional and HMO plans combined.
But in the fourth quarter, the combined Blue Cross plans earned $20 million on revenue of $1.5 billion, significantly lower than the $106.2 million earned in the same quarter last year.
Allen Maltz, Blue Cross's chief financial officer, said fourth quarter results were affected by spending in preparation for the new Medicare drug plan and in anticipation of additional members.
In January, the insurer added 60,000 new members. The company also started providing behavioral health services directly at the end of last year. Until then, they had been outsourced to a separate provider.
''We had a good year driven largely by better investment income that was better than the prior year's," Maltz said. Blue Cross is lowering its target profit margin, he said, and as a result ''we will be relying more heavily on investment income."
Harvard Pilgrim Healthcare said it earned $74.1 million on revenue of $2.2 billion last year, compared with net income of $38.6 million on revenue of $2.3 billion in 2004. The plan said it has added 32,000 members since Dec. 31, bringing membership to 925,000.
Tufts Health Plan's turnaround efforts showed progress last year.
The insurer said it had net income of $78.6 million on revenue of $1.9 billion, compared to with net of $21.8 million on revenue of $2.1 billion a year ago.
More important, the company had better operating results. In 2004, Tufts lost $3.8 million on its medical operations, earning money only from its investments. In 2005, it had income of $32.1 million from medical operations and $47.2 million in investment income.
Tufts said it ended 2005 with 620,000 members, but did not disclose membership numbers for the current quarter. It is widely expected to lose members early this year, but has said it will stem those losses during the rest of 2006 and grow membership next year.
''We saw early results of our efforts to reduce medical costs," said chief financial officer Andy Hilbert in a statement. Tufts last year instituted a series of steps to cut medical costs, including requiring doctors to receive prior approvals for x-rays and some types of surgery.
Fallon Community Health Plan, the smallest of the major insurers, earned $24.6 million on revenue of $772 million, up from $23 million on revenue of $734 million in 2004. Fallon has been expanding its provider network in Eastern Massachusetts, seeking to attract more members while steering them to lower-cost community hospitals.