While HMO enrollment is soaring and a record number of new plans began operations last year, fewer HMOs are showing a profit.
In the year ended Jan. 1, 1996, 63 new commercial HMOs were licensed, the largest group of newly licensed plans since 1985, when 126 plans began operations. That's according to the latest HMO industry report by InterStudy, a managed-care research organization based in Minneapolis.
Nationwide enrollment in 630 HMOs surpassed 59 million-or 22.4% of the U.S. population-up from 19.3% in the year ended Jan. 1, 1995. That's an enrollment increase of 16.7% from 50.9 million at the beginning of 1995.
But at the same time, only 61% of HMOs reported operating profits in 1995, down from 88% in 1994, according to InterStudy's report.
On average, HMO operating margins fell 2.3% during the same period, mainly because of increased medical costs, the report said.
Blue Cross and Blue Shield plans were more likely to report increased operating margins than were national managed-care firms or independent HMOs, InterStudy found.
Two-thirds-41-of the new HMOs were started by independent companies and provider networks, the report said. Half the new HMOs are in the East, mid-Atlantic and South Atlantic regions.
Almost 90% of HMO enrollment was "pure," meaning it didn't include point-of-service enrollment. Pure enrollment increased 13.6% to 52.5 million. Enrollment in POS plans increased 48.1% to 6 million. In POS plans, enrollees can seek out-of-network treatment for a higher fee.
Almost one-third, or 198, of commercial HMOs reported offering services to 3.7 million Medicare beneficiaries, a 26.9% gain over 1994.
More than one-third, or 220, of all HMOs offered a Medicaid product. Medicaid HMO enrollment grew 33.2% to 4.7 million.
National managed-care firms accounted for 81.8% of total HMO enrollment as well as 68% of enrollment growth in the six months ended Jan. 1, 1996. The fastest-growing companies by total enrollment in the year ended Jan. 1, 1996, were the nation's 62 independent Blues insurers, which gained a total 2.1 million enrollees; United HealthCare Corp. netted 1.1 million; Cigna Health Plans, 452,000; U.S. Healthcare, 434,000; and Oxford Health Plans, 430,000.
For the first time, InterStudy surveyed HMOs' disease management initiatives and found that most HMOs with such programs focused on asthma and diabetes.
Significantly fewer HMOs actually have implemented disease management programs than have developed such initiatives. That's because plans lack sufficient information technology capabilities, provider support and outcomes data, the report said.