First-quarter profit increase
* UnitedHealth Group, Minneapolis, said earlier this month that its first-quarter profits climbed 41% on higher premiums and strong enrollment growth. UnitedHealth, the nation's second-largest health insurer, said its net income rose to $779 million, or $1.16 per share, in the quarter ended March 31, up from $554 million, or 88 cents per share, in the year-ago quarter. Revenue increased 34% to $10.9 billion. Enrollment reached 23.1 million members, up 14% from the year-ago quarter and 3% from Dec. 31, 2004. Medical costs, excluding UnitedHealth's AARP business, consumed 78.9% of premium revenue, down from 79.5% in the year-ago quarter and 79.1% in the fourth quarter 2004.
KPS Health Plans acquired
* Group Health Cooperative, Seattle, tentatively agreed earlier this month to acquire physician-owned KPS Health Plans, the Bremerton, Wash.-based PPO, in a deal that would allow 55,000-member KPS to emerge from five years in receivership. Group Health will complete due diligence before making a final offer. Under the deal, Group Health would immediately return 50% of the $6 million in surplus notes that local providers signed to keep KPS operating after the state seized the not-for-profit in August 1999. Full repayment would depend on the PPO's performance over a few years. The acquisition would bring Group Health, which has 540,000 members in staff model HMO and point-of-service plans, into the thriving PPO market. "Group Health is interested in pursuing this opportunity because it reflects our commitment to responding to marketplace demands for innovative health plan products," Group Health Chief Financial Officer Jim Truess said in a news release. Kaiser Permanente, another staff model HMO, began offering PPO-style products last year.