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HMO Profits Drop 3.8%

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NU Online News Service, May 24, 2:18 p.m. – U.S. health maintenance organizations reported a total of $879 million in net profits for the first three quarters of 2001, 3.8% less than they reported for the first quarters of 2000, according to Weiss Ratings Inc., Palm Beach Gardens, Fla.

The number of HMOs fell 14%, to 456.

But Weiss, an independent ratings firm, says the surviving HMOs are actually starting to look healthier.

In 2000, many big HMOs were profitable, but many small HMOs lost money. Last year, the smaller HMOs began to catch up with the bigger HMOs in terms of profitability, Weiss says.

But Weiss notes that the HMOs have increased their profits by increasing premiums and withdrawing from unprofitable markets. “More consumers are being forced to bear the burden of the industry’s recovery through rising health care costs and, in many cases, a reduction in coverage options,” Martin Weiss, chairman of the ratings firm, said in a statement about the HMO profit figures.