Most of Utah's health maintenance organizations are losing millions of dollars each year. But state insurance officials have not declared a crisis.
Not yet."There is no reason for people to drop their insurance coverage," Doug Green, director of solvency and surveillance for the State Insurance Commission, told the Deseret News. "I haven't turned panicky yet; I'm just slightly depressed."
And Green is keeping an eagle eye on all of the HMOs.
Eleven HMOs are licensed in Utah, but only eight are active. Clients who enroll in HMOs pay a preset monthly fee and are assured all their health care needs, under most contracts.
Of the eight active HMOs, six had losses totaling $11.7 million in 1987.
According to Green, IHC Health Plans Inc., IHC Care Inc., Equicor Health Plan of Utah, Physicians Health Plan of Utah, HealthWise and Maxicare Utah Inc. have lost money for at least two years. (ombined, the six companies have lost more than $26 million since 1983, according to annual reports filed with the Insurance Commission.)
During those years, the majority of the HMOs have been getting outside financing, Green said.
Maxicare has been losing money since it began its Utah operation five years ago, fueling concern that the nation's largest for-profit HMO chain may be in serious trouble.
"We have been selling off selected assets, and are restructuring the company. But it is not a liquidation," said Tobi Nyberg, public relations director of Maxicare Health Plans Inc. in Los Angeles. "And it's business as usual in Utah."
But according to Green, several other companies are looking at purchasing that business. Maxicare Utah Inc. has 25,000 members.
Nybert confirmed that the company's Utah director resigned recently, but "for personal reasons."
"Until we fill the position we will have some of our corporate staff direct the operations," she said.
Only FHP and Educators Health Care made money in 1987 - $5.3 million and $61,000 respectively.
FHP spokesman Jim McPherson attributed the company's success to two main factors. "We're a staff-model; we build our own centers, hire our own physicians and support staff, so we are not so dependent on external factors such as rising hospital costs," McPherson said. "Another reason is that we have been around for a long time.
"We are the oldest HMO in the state and have built up a strong track record resulting in just over 90,000 members."
Green concurs that it takes time for the health care companies to work out the bugs.
"Any time an HMO starts from scratch, the company's input will be more than the income," Green said. "They need so many enrollees to reach a break-even point."
IHC officials agree.
"HMOs and Preferred Provider Organizations across the country are losing money," said Stewart Kirkpatrick, IHC vice president of public relations. "IHC did expect to lose money getting into a new business because of start-up costs, gaining experience and the numbers of subscribers.
"It takes a while to reach the numbers of subscribers necessary to break even," he said. "But we are right on track with our economic plan. Within two or three years we expect to break even."
The other companies losing bucks haven't made similar claims, which makes state insurance officials a bit nervous.
"We are watching all of them all very closely," Green said. "We don't like them to lose money. It means that health care costs are going up and the insurance companies are suffering for it."