Beleaguered CareNetwork finally has some good news for shareholders after two years of red ink and shrinking enrollment.
The Milwaukee-based operator of Wisconsin Health Organization Insurance Corp., a 92,000-enrollee HMO, said it has been selected by the Wisconsin Education Association, the state's largest teachers union, to provide coverage in southeastern Wisconsin.
Starting July 1, a CareNetwork subsidiary will begin offering a point-of-service insurance plan to 35,000 union members. The value and length of the contract weren't disclosed.
A point-of-service plan enables members to seek the care of non-HMO physicians at a higher out-of-pocket cost.
CareNetwork, which is 36% owned by six hospital systems, has seen its stock price plummet from a high of $19.75 per share late in 1991 to a low of $3.25 per share on Dec. 21, 1993. Once the most profitable HMO in Wisconsin, CareNetwork in the last two years has lost $18.5 million, or $4.04 per share, on revenues of $330 million.
The difficulties stemmed in part from squabbles between physicians and hospitals over reimbursement and other issues, which led to a change in management almost two years ago. Since then, executives have worked to improve physician relations and restore shareholder confidence.
Although the company has predicted another loss in the quarter ended March 31, news of the teachers contract has perked up the stock, which had a recent over-the-counter price of $6.50 per share. Executives said the contract also will reverse the decline in enrollment, which once stood at 150,000.
The teachers insurance group provides coverage for 105,000 Wisconsin school employees.