While its regional rivals continue to slip and stumble, one New England health insurer has maintained its solid financial footing.
Blue Cross and Blue Shield of Massachusetts announced last week that it earned $61.3 million last year, its third straight annual surplus. And bolstered by a 20% jump in membership over the past 13 months, the Boston-based plan is poised to enjoy yet another year squarely in the black.
"The company is very disciplined and committed to continued growth," said President and Chief Executive Officer William Van Faasen. "We're confident we can remain profitable for the long haul."
Such optimism is rare at a time when many Northeast health plans are posting big losses. Brookline, Mass.-based Harvard Pilgrim Health Care was placed in state receivership last month when the HMO discovered its 1999 deficits would top $150 million. Two other Massachusetts insurers-Tufts Health Plan and Fallon Community Health Plan-also lost millions last year.
For Van Faasen, the Blues' financial strength feels like a vindication. The 51-year-old executive engineered the not-for-profit's turnaround after it lost nearly $90 million in 1996.
That year, its newly formed Medicare HMO product was pulled from the market while federal regulators investigated the health plan for fraud. The Blues paid a $700,000 fine to settle the charges.
Since then, the company has used cutbacks and price increases to reclaim profitability. In 1997, it slashed 3,000 jobs, sold its eight health centers and exited several noncore businesses. And unlike many insurers, it hasn't offered steep discounts to lure new members, said Blues Executive Vice President Peter Meade.
"We've managed our business in a more fiscally responsible manner. While our competitors were chasing members at any cost, we focused on cutting our administrative overhead," Meade said, adding that the company is boosting premiums 8% to 12% this year. "Now, we're not having to play catch-up with pricing to rebuild our balance sheet like so many others."
The Blues posted a 1998 gain of $60 million on revenue of $2 billion. Last year, revenue rose 25% to $2.5 billion
The health plan has been adding members at an impressive clip since seeing its rolls decline in 1997 and 1998. On top of the 140,000 it signed up last year, the Blues added another 154,000 enrollees in January. Total Massachusetts enrollment now tops 1.9 million.
The Blues' solid financials have become a draw for employers and individuals seeking coverage, Van Faasen said.
He also says the company has no plans to pursue any of its struggling competitors. The focus for now remains on managing internal growth.
"We don't want to get distracted," Van Faasen said. "We're just going to keep on doing what we're doing."