Several hospitals in Wisconsin are learning what dozens of hospitals across the country already know-it's hard to make money running a commercial health insurance plan.
Three of Wisconsin's eight money-losing HMOs last year were owned in whole or in part by hospitals, according to data obtained last week by MODERN HEALTHCARE from the Wisconsin insurance department.
The three plans are Greater La Crosse Health Plans, Onalaska; Gundersen Lutheran Health Plan, La Crosse; and Prevea Health Plan, Green Bay.
The three plans posted a combined net loss of more than $1.7 million in 1997, according to financial information recently filed with the state insurance commissioner's office.
They were among eight of the state's 25 HMOs to lose money last year. Overall, Wisconsin HMOs posted total net income of $12.8 million in 1997. A published report said that's down from $19.5 million in the previous year.
Of the hospital-related plans that lost money last year, Greater La Crosse was the biggest loser with a net loss of almost $1.1 million on revenues of more than $30.7 million. In 1996 the plan had net income of almost $303,000 on revenues of more than $22.4 million.
The 23,100-enrollee plan, which began operations in 1986, blamed its losses primarily on skyrocketing drug expenses that increased 27% in 1997.
Premiums just couldn't keep pace with those rising costs, said Joan Mueller, administrator of business development at La Crosse-based Franciscan Skemp Healthcare, which owns a majority interest in the plan. Franciscan Skemp, which is part of the Mayo Health System, owns three Wisconsin hospitals in Arcadia, La Crosse and Sparta.
To help make up for the loss, the HMO has raised premiums about 12% this year.
"Clearly, we are looking at some benefit redesign," Mueller said.
Gundersen Lutheran attributed its losses to being a relative newcomer.
The plan posted a net loss of almost $293,000 in 1997 on revenues of $21 million.
Despite the loss, the plan's performance improved over 1996 when it lost about $531,000 on revenues of $16 million.
Started in 1995, the plan is owned by Gundersen Clinic, a 330-physician group practice, and 293-bed Lutheran Hospital, La Crosse.
"We're on a learning curve," said Patrick Killeen, the plan's executive director.
The plan has about 32,000 enrollees, 15,000 of whom are in a self-funded program.
Prevea also blamed its losses on being a start-up. The plan didn't enroll the first of its almost 30,000 members until March 1997.
In 1997 Prevea reported a net loss of just under $400,000 on revenues of more than $4.5 million.
Two Green Bay hospitals, 119-bed St. Mary's Hospital Medical Center and 353-bed St. Vincent Hospital, are part of a joint venture called Prevea Health Services, which holds a majority interest in the health plan.
"Actually, we did better than we projected to do," said Gordon Gebbens, the plan's president and chief executive officer.
He said the plan had expected to post losses of as much as $500,000.
"With any start-up organization, you have some upfront costs you are going to incur while you get the membership going," Gebbens said.