Local HMOs doing well

0 Comments | La Crosse Tribune, Jun 29, 2002 | by Rindfleisch, Terry

La Crosse's two health maintenance organizations reported about $520,000 in profit through the first quarter of 2002, while premiums continue to closely track costs statewide.

Health Tradition, Franciscan Skemp Healthcare's HMO, reported a net income of $104,618 for the first three months of the year. Gundersen Lutheran Health Plan had a firstquarter profit of $417,833 after coming off its largest profit year in 2001.

Gundersen Lutheran Health Plan had a $2.1 million profit in 2001, or about 2 percent of revenue. Health Tradition had a profit of $664,000 last year, or about 1 percent of revenue, down from $904,000 in 2000.

Nancy Wenzel, executive director of the Wisconsin Association of Health Plans, said revenues and medical costs each increased 9 percent over the same period last year for Wisconsin HMOs. Yet, since April 1, 2001, the profit margin has been 0.57 percent for the state's HMOs, she said.

"The entire margin could have been eliminated with only a handful of additional catastrophic claims," Wenzel said.

Wisconsin HMOs had a net income of 2 percent in the first quarter of 2002, but it is only the fifth time in the past 13 quarters that state HMOs have yielded a profit.

The profit margin for Gundersen t Lutheran Health Plan was 1.8 percent for the first quarter of 2002. "It's a modest margin, about where we want to be," said Pat Killeen, executive director of Gundersen Lutheran Health Plan. "We're covering our costs and generating net income."

That income also is needed to cover more reserves required by law, he said.

Killeen said HMOs have been forced to dramatically increase premiums because of rising medical costs and prescription drug prices. Premiums have been raised by as much as 20 to 25 percent in some cases over the past two years, he said.

Beverly Larson, director of operations for Health Tradition, said the Franciscan Skemp HMO also has boosted premiums by double-digit percentages because medical and drug costs are rising rapidly.

"We're keeping our head above water," Larson said.

Health Tradition is trying to be more flexible about its benefits plans, offer more options to employers and help them design their own packages, she said.

Some employers are dropping out of plans because they can no longer afford it, Larson said. Employees will be paying more for their health care with higher deductibles, co-payments and premiums, she said.

"It's going to be a real close year for us," Larson said. "Our administrative costs are running 10 to 12 percent, and there is more man dated stuff this year."

Killeen said Gundersen Lutheran Health Plan also will offer more varied benefits packages to give employers more options.