An HMO run by three Louisiana hospital systems has been hemorrhaging so much money that the state insurance commissioner has asked them to infuse massive amounts of new capital in the health plan, MODERN HEALTHCARE has learned.
The situation might give pause to those hospitals and physicians anxiously waiting at the door to become direct risk contractors with Medicare as provider-sponsored organizations (See stories, pages 2 and 6).
The HMO, Advantage Health, is a New Orleans-based risk plan with about 87,000 enrollees, mostly in the New Orleans and Baton Rouge regions. Launched in 1994, it's the fourth largest HMO in Louisiana.
Insurance Commissioner Jim Brown's office denied speculation that Advantage Health was on the verge of being declared insolvent but would not disclose how much money the state has ordered the hospitals to transfer to their HMO.
"They're an HMO that has lost a lot of money," said Richard O'Shee, healthcare adviser to the commissioner. "To date, the owners of the HMO have put up all the funds requested, and it remains solvent."
The state insurance department has assigned an employee to work in Advantage Health's office for a month now, and the plan is drafting a corrective action plan.
Advantage Health has three owners: Touro Infirmary, the oldest hospital in New Orleans; the Franciscan Missionaries of Our Lady, based in Baton Rouge, which owns three hospitals in Louisiana; and the Sisters of Charity of the Incarnate Word Healthcare System, based in Houston. The Sisters of Charity owns three Louisiana hospitals.
Executives at the two Catholic systems declined to comment on the situation. Touro Chief Executive Officer Gary Stein said through a spokesman that the capitalization requirements for Advantage Health are not out of the ordinary for a start-up plan.
Through the first nine months of last year, Advantage Health took in $76.6 million in premiums, but it paid out $77 million for care to enrollees, according to state figures.