HMO operating margins moderated in 1994, with fewer plans reporting very high margins or losses, according to the latest InterStudy report.
Ten percent of HMOs enjoyed margins of more than 10% in 1994, compared with nearly 17% of plans in 1993.
Just 13% of HMOs reported operating losses, compared with 18% in 1993.
More HMOs settled in the middle of the spectrum, with 51% having margins between 0% and 5%. In 1993, 37% were in that range.
Contrary to popular belief, the industry isn't concentrating in a few giant companies, according to InterStudy, a Minnesota-based managed-care research organization.
The top seven companies had 35% of all HMO enrollees in January 1995, compared with 44% in January 1985. Also, no state has more than 30% of its HMO enrollees in plans that operate in more than one state.
InterStudy's latest Competitive Edge Industry Report also says:
HMOs covered 19.4% of the U.S. population on Jan. 1, 1995, up from 17.3% a year earlier. Total HMO enrollment was 50.9 million in 562 plans.
Open-ended HMO products were the fastest-growing segment in 1994 with a growth rate of 45.5% and a gain in enrollment of 1.3 million, compared with a 9.2% growth rate for traditional HMOs.
Second-fastest growing was Medi-caid, with a 35.7% annual increase to 3.5 million, or 11% of Medicaid beneficiaries nationwide. As of Jan. 1, more than a quarter of HMOs offered a Medicaid product.
During 1994, at least 46 new HMOs were licensed for commercial products, with the South Atlantic and West South Central regions leading in new HMO activity.