- change ups
2009 mixed for local health maintenance organizations
Health maintenance organizations that serve Kent County reported mixed results for 2009, financial statements from the Michigan Office of Financial and Insurance Regulation showed.
Of the two HMOs with the largest commercial market shares in West Michigan, Priority Health reported an increase in net revenue and membership, while Blue Care Network decreased in both categories. The Grand Rapids-based Grand Valley Health Plan reported a bottom line in the red for the second year in a row.
At Priority Health, headquartered in Grand Rapids and majority-owned by Spectrum Health, HMO enrollment bounced up by more than 21,000 to 380,816, a 5.8 percent increase, according to the OFIR filing. HMO enrollment at the end of 2009 was the highest since 398,183 after the 2007 acquisition of southeastern Michigan HMO Care Choices.
CFO Greg Hawkins said Medicare Advantage enrollment has seen healthy growth; enrollment has expanded by 83 percent to 17,907. Total Medicare Advantage enrollment in Michigan was 383,595 in 2009, according to the Kaiser Family Foundation.
Priority Health’s HMO took a loss on underwriting of $3.1 million for the year, which Hawkins said is a similar ratio to premium income as last year. “A lot of it is medical trends,” he said. Priority Health spends 90.9 cents of every premium dollar on health costs, he added.
Still, improvement in investment income and administrative expenses left the nonprofit HMO with a net income of $17.82 million for 2009, compared to $13 million in 2008. At 1.3 percent of premium income, that was a slight improvement from 2008, when net revenue came in at 1 percent, Hawkins said. He said Priority Health’s target is 3 percent.
“Given the economy, in Michigan specifically, this is not a bad result,” Hawkins said.
Priority Health’s main competitor in the Grand Rapids area is Blue Care Network, the HMO of Blue Cross Blue Shield of Michigan. BCN reported net revenues of $62.7 million for 2009, or 2.8 percent of net premium income, down from $85.5 million in 2008.
The HMO saw a net underwriting gain of $34.4 million, down from $52.9 million in 2008. Membership was down to 525,226 at the end of 2009, compared to 554,666 at the end of 2008, and 626,403 at the end of 2007. BCN’s HMO net premium income was $2.2 billion, compared to $2.14 billion in 2008, about a 3.3 percent increase. HMO membership saw a drop of about 5.3 percent.
“It’s more the economy this year than anything else,” with companies downsizing, closing or choosing other types of health coverage such as self-pay, CFO Sue Kluge said.
Medicare Advantage enrollment at BCN was up about 24 percent, to 31,497, at the end of 2009. Kluge said that helped boost premium income despite lower HMO total membership, because BCN receives more money per member for Medicare Advantage premiums than for commercial premiums. However, the older members in Medicare Advantage use more health care and increase costs, as well, she said.
Grand Valley Health Plan President & CEO Ron Palmer said two years of higher-than-usual claims took a toll on the financial statement. GVHP is the only HMO in Michigan that employs its own medical staff to provide care for its members. It reported a net loss of $1.17 million for 2009, on the heels of a $1.8 million net loss in 2008.
“We’ve had some really high cost cases. That’s what we’ve been seeing all year,” Palmer said.
Still, at $1.5 million, underwriting losses in 2009 were less than the $3.6 million incurred in 2008. Palmer said the first quarter of 2010 has been more positive, with high-cost cases mitigating and some growth in membership, which dropped from 8,330 at the end of 2008 to 7,558 at the end of 2009.