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Press Release
Ohio Managed Care Review 1997 Finds: Ohio HMOs Face Losses, Slow Enrollment Gains; New Provider Systems Gain Market Strength
COLUMBUS Ohio/PRNewswire/ -- A new report finds that many health maintenance organizations (HMOs) in Ohio are losing money in the face of reduced premium revenues. Furthermore, enrollment in Medicare and Medicaid plans is increasing and will have significant impacts on health plans and providers. The report Ohio Managed Care Review 1997, also finds that provider systems in several parts of the state have strengthened their market position and have made progress in achieving greater efficiency.
The report, released at the 1997 Annual Convention of the Ohio Association of Health Plans, was prepared by Allan Baumgarten, an independent analyst on health care policy and finance. He is also the author of annual reports analyzing the managed care markets in Minnesota, Michigan and Colorado. Support for his research in Ohio was provided by the Integrated Healthcare Division of SmithKline Beecham.
The report found: Ohio HMOs, on average, lost 0.4 percent on revenues of $2.6 billion in 1996. Results for the first six months of 1997 show a similar shortfall. While HMOs such as CIGNA, Anthem (Health Maintenance Plan) and United HealthCare remained profitable, Kaiser and HMO Health Ohio (owned by Medical Mutual of Ohio) suffered severe losses. HMO premium revenues fell by almost two percent in 1996.
The profitability problems of HMOs are due partly to falling premium revenues. On a per member per month basis, the report shows, average HMO revenues for commercial enrollees declined l.9 percent in 1996, to $119.03.
HMO enrollment in the first half of 1997 increased by only 2.5 percent after growing 15.8 percent in 1996. Almost 2.5 million Ohioans are enrolled in an HMO now, about 22 percent of the population. Much of the new growth is in Medicare and Medicaid HMO plans. Thirteen HMOs now sell Medicare products to Ohio seniors. While only about eight percent of the seniors in the state now belong to an HMO, that proportion could increase to 40 percent or more, which is the rate in the Denver area. That growth will lead to reductions in hospitals admissions and shorter stays. On the other hand, commercial (employer-based) enrollment has leveled off for now, as many employers prefer to stay with less restrictive indemnity or preferred provider plans.
While hospitals and physicians have been forming networks to gain greater financial control over patient care, most HMOs have been slow to strengthen ties to providers through capitation arrangements. The report finds that only 23.9 percent of HMO payments for health services are paid through capitation arrangements. While the new hospital systems have formed large organizations, they have just begun to take important first steps toward "rightsizing" their capacity and achieving integrating their operations.
Copies of the report are available to the public for $75.00 by calling Baumgarten at 612-925-9121. Fax: 612-925-9341, E-mail: Baumg010@gold.tc.umn.edu
SOURCE Allan Baumgarten
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