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Health Net Reports Lower Net Income

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NU Online News Service, Nov. 9, 11:42 a.m. – Health Net Inc., Los Angeles, a managed care company, is reporting $2.3 million in net income for the third quarter on $2.3 billion in revenue, compared with $46 million in net income on $2.4 billion in revenue for the third quarter of 2000.

The latest earnings figures include $80 million in restructuring charges. The charges will cover the cost of eliminating 1,500 full-time jobs, disposing of computer systems, and making other changes to the structure of the company, Health Net says.

Excluding the restructuring charges, net income would have been $45 million.

Health Net, previously known as Foundation Health Systems Inc., once focused mainly on health maintenance organization plans. It says it is now trying to add more preferred provider and point-of-service products. The company is also trying to sell more coverage to individuals and small employer groups, and it is a major administrator for TRICARE, a federal health plan for veterans, military personnel and military dependents who seek care away from military facilities.

Total insured enrollment increased to 4 million Sept. 30, from 3.8 million a year earlier, while TRICARE enrollment held steady at 1.5 million.

Because of the change in the mix of commercial products provided, average premium revenue per insured commercial major medical member fell 8%, to $607.

But Health Net estimates its underlying medical costs rose only 5.1%. Other managed care companies have been reporting cost increases of 10% to 15%.