Half of the nation's 574 health maintenance organizations lost money last year, but Utah's eight HMOs were not among them — at least as a group.
Utah's HMOs eked out profits of $12.31 million in 1999, according to a report released Wednesday by Weiss Ratings Inc., a Florida-based firm that issues safety ratings on more than 16,000 U.S. financial institutions, including banks, brokers, insurance companies and HMOs.
That $12 million in profits for the local firms may not sound like much, but it must look pretty good to the 56 Texas HMOs, more than half of which suffered losses last year totaling $463.03 million, the largest by far of any state.
Conversely, California's HMOs racked up profits of $789.35 million last year with only 28 percent of the 50 HMOs domiciled there reporting losses.
Rating the eight Utah-based HMOs, Weiss ranks Healthwise as the strongest with a B rating. Weiss lists the company's total assets at $21.43 million, down 11.3 percent; total capital at $15 million, down 22.5 percent; and total premiums at $30.14 million, down 10 percent from the previous year. Net income was said to total $2.55 million for 1999.
Conversely, Weiss rates Altius Health Plans, based in South Jordan, and Intergroup of Utah Inc., as the two weakest HMOs in the state, grading Altius D and Intergroup D+.
However, Intergroup was acquired last October by Altius, and the company says all of the former Interwest members have been integrated into Altius.
Weiss puts Altius' total assets at $25.25 million and total capital at $6.88 million. Premiums in 1999 totaled $96.36 million, and the firm is said to have suffered a net loss for '99 of $5.05 million.
Intergroup is said by Weiss to have total assets of $6.87 million, total capital of $2.97 million and premiums of $6.22 million last year. It did, however, report a profit of $37,000 for the year, according to Weiss.
Percentage change figures such as those cited for Healthwise were not available for Altius and Intergroup.
Altius acquired Intergroup in November after the Utah Department of Insurance approved the deal under terms not released. Altius was founded in 1998 by a group of Utah investors who bought the Utah operations of PacifiCare Health Systems, based in California.
PacifiCare Utah had lost $77 million in 1997. The new owners — Altius is privately held — operated it for only two months in 1998, when the losses totaled $24 million. Last year, the red ink shrank to $5.05 million, and the company predicted it would become profitable this year.
Altius spokesman Dee Brewer said Wednesday he was not sure that will actually happen this year, but he emphasized that its 100,000 members have no reason to be concerned, Weiss' D rating notwithstanding.
"The Weiss report is based on financial performance and doesn't take into consideration customer service, ease of processing claims, availability of doctors and the other things that are important to consumers," said Brewer.
"You want to know your insurance company will pay its claims, but the Department of Insurance has safeguards that (HMOs) are appropriately capitalized and have net equity sufficient to pay claims and continue in operation."
The Weiss report makes clear that operating an HMO is not an automatic road to riches. The U.S. HMO industry lost a total of $186.6 million last year despite total profits of $753.5 million among the nation's 34 largest.
"There is a very large and disturbing disparity between the profits of the few large HMOs and the continuing red ink in the rest of the industry," said Martin D. Weiss, chairman of Weiss Ratings.
Losses exceeded profits in every HMO size category last year except for the very largest, those with more than a half-million members.
Weiss said the HMO industry remains generally unstable and many firms are changing benefit structures, raising premiums, revising or terminating provider contracts, and dropping out of unprofitable markets, such as Medicare and regions that have shown the largest losses.
E-MAIL: max@desnews.com