The nation's HMOs nearly doubled their net profits last year, earning $10.2 billion in 2003, up from $5.5 billion in 2002, according to a new report by financial ratings firm Weiss Ratings. California and Illinois HMOs reported the highest aggregate earnings at $773.6 million and $624.6 million, respectively. One HMO, Kaiser Permanente, Oakland, Calif., accounted for a full fifth of the industry's profit gains, reporting a year-over-year earnings increase of $1.1 billion due largely to regulatory changes that required the company to consolidate its year-end financial statements for all its businesses, including hospitals and provider groups. Meanwhile, the nation's Blue Cross and Blue Shield plans saw their combined profits jump 63% last year, to $5.4 billion from $3.3 billion in 2002, the study found. "The industry's soaring profits continue to irk both consumers and businesses who are shouldering skyrocketing healthcare costs without any perceived improvement in benefits," Melissa Gannon, vice president of Weiss, said in a press release. "We may soon see the next wave of consumer backlash forcing HMOs to evolve their cost structures." Of the 502 HMOs reviewed by Weiss using year-end 2003 data, 24 companies were upgraded, while 14 were downgraded. -- by Laura B. Benko
HMOs almost doubled net profits in 2003
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