Oklahoma's two largest hospital-owned HMOs lost nearly $7 million last year, according to figures obtained last week by MODERN HEALTHCARE.
And at least one of them had better start making money if Stanley Hupfeld wants to keep his job.
Hupfeld's future employment as Integris Health's president and chief executive officer requires his system's HMO to show a profit this year, he said in an interview. It was his idea to launch Healthcare Oklahoma, and it has not turned a profit since it began operations in 1995.
"It could be a career-limiting move on my part because I recommended it, but I'm very pleased to see we are reaching the break-even point," said Hupfeld, 54, who has run Integris since it was formed three years ago. Before that, he ran Integris' flagship hospital, 424-bed Integris Baptist Medical Center in Oklahoma City for 11 years.
Integris' 36,814-enrollee HMO lost $3.2 million in 1997 on total revenues of $45.8 million, according to financial information filed with the Oklahoma Department of Health. Integris, an 11-hospital not-for-profit system based in Oklahoma City, is the majority owner of Healthcare Oklahoma, a for-profit plan.
Minority owners in the HMO are Deaconess Hospital in Oklahoma City; Nashville-based Columbia/HCA Healthcare Corp., which owns 10 hospitals in Oklahoma; and Hillcrest Health Center in Oklahoma City.
Oklahoma's other struggling hospital-owned HMO is 61,840-enrollee CommunityCare of Oklahoma, which lost $3.7 million on total revenues of $82 million last year, according to Department of Health data.
Four Roman Catholic hospitals launched for-profit CommunityCare in 1994. The plan's owners are Saint Francis Hospital in Tulsa, St. John Medical Center in Tulsa, Mercy Health Center in Oklahoma City and St. Anthony Hospital in Oklahoma City. The hospitals deferred comment about the losses to the plan.
"The national average to turn a profit is four years, but in Oklahoma it may be about twice that because we are a rural state," said Lujuana Wire, managed-care director at the Department of Health.
HMOs that accept financial risk like capitated payment contracts depend on a high volume of healthy enrollees to turn a profit. That makes it tough for HMOs to make a go of it in rural areas, which have fewer people who often need high-cost medical care.
Executives at both of the money-losing health plans said the losses were anticipated and weren't hurting operations on the delivery side of their businesses.
"Starting our fourth year of operations, we now have over 50,000 members, and we hope to show we have turned a profit in the next three months," said Jon Friesen, president and CEO of Healthcare Oklahoma.
Integris executives said the system has been expanding its provider network into rural areas so it will have a large pool of patients for its HMO.
CommunityCare President David Pynn declined to be interviewed.
In a statement, the plan said: "We are on budget to break even for the end of this year, which is in our long-term plan, and our hospital owners were aware of that."