Harvard Pilgrim Health Care continued its financial turnaround in 2018 after posting several consecutive years of operating losses.
Massachusetts' second-largest health plan, with nearly 1.2 million enrollees in Connecticut, Maine, Massachusetts and New Hampshire, reported an operating income of $70.9 million on revenue of $3.2 billion in 2018, up from a $28.3 million operating loss on revenue of $3 billion.
Wellesley, Mass.-based Harvard Pilgrim's financial struggles began in 2014 as it had difficulty adapting to the risk-adjustment program implemented through the Affordable Care Act, Michael Carson, president and CEO of Harvard Pilgrim, told Modern Healthcare. But the organization has started to manage that coding process better throughout the system, which has helped, he said.
It also narrowed its service lines in 2018, implemented a medical cost-management process, restructured its pharmaceutical spending and reduced its administrative overhead. This left the organization with about 50,000 to 75,000 fewer covered members but a more sustainable model, said Carson, who took over from former CEO Eric Schultz in June.
"To ensure we have a sustainable business going forward, we needed to back off some other lines of business," he said.
Harvard Pilgrim's subsidiaries Health Plans, TrestleTree and MedWatch generated higher than expected revenue last year, which helped its bottom line, executives said.
Harvard Pilgrim and Partners HealthCare tabled their merger talks in 2018 in part because the timing wasn't right, Carson said. The organizations may still explore a merger several years down the road, he said.
Meanwhile, Beth Israel Deaconess Medical Center and Lahey Health completed their merger March 1. Partners is also pursuing a deal with Providence, R.I.-based Care New England Health System.
For the fourth quarter of 2018, Harvard Pilgrim reported a net loss of $9.8 million and an operating loss of $2.3 million on revenue of $767.6 million. In the fourth quarter of 2017, the health plan reported a net loss of $13.4 million and an operating loss of $19.8 million on revenue of $748.2 million.
