Three hospital-owned HMOs in Georgia accounted for more than half the $31 million lost last year by the 19 HMOs operating in the state.
The three plans combined lost $17.3 million, according to data obtained last week by MODERN HEALTHCARE from the Georgia Office of the Commissioner of Insurance.
The plans' financial performances, like many others reported by MODERN HEALTHCARE over the past two months, reveal that hospitals across the country are losing millions of dollars in the commercial insurance business. Yet, the losses haven't quelled hospitals' interest in entering risk contracts with Medicare as provider-sponsored organizations.
The three Georgia plans are:
HPC Health Plan of Georgia, with a net loss of $11.5 million.
FamilyPlus Health Plans of Georgia, with a net loss of $3.6 million.
Athens Area Health Plan Select, with a net loss of $2.2 million.
Baptist Health System, Birmingham, Ala., is the majority owner of a holding company that owns and operates HPC Health Plan, which has 6,000 enrollees.
Baptist, which owns or manages 13 hospitals in Alabama, bought the Georgia plan in late 1996 as part of package deal that included another HMO in Alabama.
While the Georgia plan has suffered losses, new premium increases are starting to kick in, and the plan is beginning to benefit from renegotiated provider contracts, said Judy Barnes, chief operating officer for Health Partners Southeast, the holding company that owns the HMO. "We projected losses," she said.
In 1997 the HMO had total revenues of $12.6 million. In 1996 the plan had total revenues of $20.7 million and a net loss of $8.4 million. The decline in revenues was due to disenrollment after the plan was sold to Health Partners, Barnes said.
She said the HMO's financial performance already has improved this year, and it should break even by next year.
The money-losing HMO hasn't caused patient care to suffer, Barnes said. "Quality is the absolute priority," she said
FamilyPlus Health Plans is owned by ESR Children's Health Care System, a parent company that includes 196-bed Egleston Children's Hospital at Emory University and 165-bed Scottish Rite Children's Medical Center, both in Atlanta. Scottish Rite merged with Egleston earlier this year.
An Egleston spokeswoman blamed the plan's $3.6 million loss partly on medical expenses that exceeded projections. "We had a very heavy fourth quarter," said spokeswoman Karin Koser. In 1997 the plan had total revenues of $38.8 million.
Formed in December 1995, 38,000-enrollee FamilyPlus serves primarily Medicaid beneficiaries, Koser said.
In 1996 the plan posted a net loss of $4.8 million on revenues of $9 million.
Koser said the HMO's losses haven't impeded the delivery of care. "Absolutely not," she said.
Another money-losing plan was the Athens Area Health Plan Select.
The plan is owned by Athens Regional Health Services, parent company of 315-bed Athens (Ga.) Regional Medical Center.
The plan, which became operational in August 1997, blames its $2.2 million loss on start-up costs.
The plan, now with 5,600 enrollees, expects to break even when it has about 15,000 enrollees.
"We're not planning on losing money on this thing in the long haul," said John Drew, president and chief executive officer of Athens Regional Medical Center.
Such early losses are predictable.
"It's very typical for HMOs to lose money the first few years they do business," said Kevin Curtin, executive director of the Georgia Association of HMOs, a trade group with a dozen members.