A Louisiana HMO sponsored by three hospital groups has thrown in the towel and voluntarily gone out of business, but not before losing a reported $12 million in the first nine months of 1998.
The plan, Advantage Health, fell on hard times shortly after winning a contract to serve state employees starting July 1, 1997. The HMO bid too low on the contract and was swamped with 45,000 new enrollees, which it couldn't properly handle.
The for-profit health plan was formed in 1994 by three equity partners: Touro Infirmary in New Orleans; Franciscan Missionaries of Our Lady Health System, a three-hospital system based in Baton Rouge; and Sisters of Charity of the Incarnate Word Healthcare System, an 11-hospital system based in Houston.
At deadline, representatives of the three hospital groups could not be reached for comment.
As of March 31, 1998, Advantage Health had 94,214 enrollees and 14% market share, with a loss ratio of 106%. A loss ratio of more than 100% means the plan is spending more money than it is receiving in premiums.
As of Sept. 30, 1998, enrollment had declined to 77,468.
According to statistics provided by the Louisiana Department of Insurance, the plan lost $12.5 million from Jan. 1 through Sept. 30, 1998. In 1997 it lost $30 million.
The plan withdrew from the Medicare HMO business in early November, leaving 11,000 enrollees to find new insurance.