The financial ills of health maintenance organizations in Illinois improved slightly last year on higher premium charges, according to a report by the managed-care industry’s biggest critic in the state.
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A study of 33 HMOs operating in Illinois shows the average premium per patient rose 7.3 percent last year, while enrollment fell slightly. The average patient’s premium was $1,832 in 2000, up from $1,707 in 1999.
The latest guide to HMOs, the sixth annual report published by the Illinois State Medical Society, is based on 2000 data from HMO financial statements filed with the Illinois State Department of Insurance.
The medical society says consumers and employers should use the financial picture of HMOs as one way to measure whether certain plans are viable and, therefore, able to provide good patient care.
“HMOs are healthier than their public claims,” said Dr. Ronald Ruecker, the medical society’s president. “They would like to cry poor because that’s a good strategy in one way for public opinion, but the data doesn’t say that. Across the board they are pretty healthy.”
In 2000, HMOs earned $1.46 for every $100 in revenue, compared with 20 cents for every $100 in revenue in 1999. Profits came as enrollment fell to 2.38 million in 2000 from 2.46 million in 1999.
For their part, HMOs say the profit margin is hardly a windfall.
“It’s hard to believe an industry with profit margins of 1.46 percent can be criticized as being lucrative,” said David Dring, spokesman for the Illinois Association of Health Plans. “Almost half of [HMOs] are operating in the red.”
Big green for Blues: Although Blue Cross and Blue Shield of Illinois stands by its mission to remain non-profit, that didn’t stop the Chicago-based insurer from making a handsome return off a for-profit health plan.
The Illinois Blues recently made nearly $40 million off the sale of its stake in RightChoice Managed Care Inc., a publicly traded Blues plan in Missouri. The Illinois Blues sold its 695,800 RightChoice shares in the “$60 range,” after RightChoice announced its sale to California-based Wellpoint Health Networks Inc. last month.
In 1999, Illinois Blues bought a 20 percent stake in RightChoice at $9.50 a share. At the time of the investment, documents filed with the Securities and Exchange Commission said the Illinois Blues was interested in an alliance or consolidation with RightChoice, which operates in Missouri under the Blues brand.
But Illinois Blues officials say the successful investment in RightChoice in no way signals any intention to join Wellpoint and the growing number of other Blues plans on the public markets.
“At the time we bought it, the stock was undervalued,” said Illinois Blues spokesman Tony Rau. “We thought this was a reasonable time to sell it, with that value being what it was.”
Arthritis drug success: Abbott Laboratories’ experimental rheumatoid arthritis drug, D2E7, is reducing long-term structural damage of the joints for the majority of patients who take the treatment, according to a new study.
Results of the study, which will be released Tuesday at the annual American College of Rheumatology meeting in San Francisco, are good news for Abbott, which has high hopes for the drug.
D2E7 was the primary reason Abbott bought BASF AG’s Knoll Pharmaceuticals this year for $6.9 billion. A so-called monoclonal antibody, D2E7 homes in on disease cells to help do more than simply treat painful symptoms.
New studies of D2E7 show the drug “will slow or stop actual disease progression,” said Dr. John Leonard, Abbott’s vice president of global pharmaceutical development.
Abbott expects to seek U.S. Food and Drug Administration approval for D2E7 next year and to begin marketing the drug in 2003.