Blue Cross and Blue Shield of Massachusetts reports second quarter financial results.BOSTON--(BUSINESS WIRE)--Aug. 7, 1996--Blue Cross and Blue Shield Blue Shield A US not-for-profit health care insurer that is a reimbursement intermediary for physicians. Cf Blue Cross. of Massachusetts today released its quarterly and six-month financial results for the period ended June 30, 1996. The company reported a net loss of $34.5 million for the second quarter on premium revenues of $884 million. For the six months ending June 30, 1996, the company had a net loss of $53.5 million on premium revenues of $1.7 billion. Blue Cross and Blue Shield of Massachusetts' first half results are affected by higher claims activity that typically occurs in the early part of the year. As a result, the company anticipated a net loss for the first half of the year. However, due to a combination of industry-wide claims, trends and some special circumstances special circumstances n. in criminal cases, particularly homicides, actions of the accused or the situation under which the crime was committed for which state statutes allow or require imposition of a more severe punishment. affecting BCBSMA BCBSMA Bluecross Blueshield of Massachusetts , the loss is somewhat higher than expected. During the first half of 1996, medical costs for the entire managed care industry rose at rates of four to six percent versus forecasts of one to three percent. Rapid growth in outpatient outpatient /out·pa·tient/ (-pa-shent) a patient who comes to the hospital, clinic, or dispensary for diagnosis and/or treatment but does not occupy a bed. out·pa·tient n. service costs and a rise of more than ten percent in prescription drug prescription drug Prescription medication Pharmacology An FDA-approved drug which must, by federal law or regulation, be dispensed only pursuant to a prescription–eg, finished dose form and active ingredients subject to the provisos of the Federal Food, Drug, costs compared to 1995, were the principal factors in the cost increases. At the same time, managed care premiums have remained flat and, in some cases, have declined due to increasing price competition. In Massachusetts, where managed care penetration is among the highest in the nation, overall market growth opportunities are limited and pricing competition has been correspondingly more intense. These trends have contributed to a first-half $19.8 million loss for HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, Blue, the company's principal managed care product. William C. Van Faasen, president and chief executive officer of Blue Cross and Blue Shield of Massachusetts, said, "While special factors contributed to a higher than projected loss, this situation is fully manageable. This company has been profitable in each of the past seven years, and we have a solid financial base with reserves of $210 million. The year-to-date loss is less than two percent of our annual gross revenues of $3.4 billion. While we plan for an overall loss for the year, we do expect marked improvement in results in the second half, and we anticipate that earnings growth will continue as we move into 1997." Special factors in the company's senior product markets accounted for approximately 40 percent, or $22.7 million of the year-to-date loss. Approximately $18.2 million of this loss is attributed to Blue Cross' medigap membership, the oldest among health plans across the state. These members use health care services at rates that exceed premium levels. Although medigap market reform has been enacted, Blue Cross will continue to bear unique cost burdens until the period of transition to a fully equitable marketplace is complete. At the same time, the temporary suspension of marketing for Blue Care 65, the company's managed care product for seniors, has delayed receipt of health plan revenues and earnings from that product. Over the next six months, Blue Cross and Blue Shield looks forward to the resumption RESUMPTION. To reassume; to promise again; as, the resumption of payment of specie by the banks is general. It also signifies to take things back; as the government has resumed the possession of all the lands which have not been paid for according to the requisitions of the law, and the of marketing its Blue Care 65 managed care product for seniors and expects to realize the full benefits of the implementation of new provider contracts. Van Faasen said the company's management is also working vigorously to respond to the changing market conditions that are affecting the company's results. "We are sharpening For image sharpening, see . Sharpening is the process of creating or refining a sharp edge on a tool or implement. The term has a wide application but can be expressed as the creation of two intersecting planes which produce an edge that is sharp enough to cut through the target the focus of our company around the key elements of quality, service and cost performance. We will reduce overall costs, improve efficiencies in every operation and strengthen margins in each of our product areas." During the last quarter the company has seen positive results in several areas. Despite the extremely competitive marketplace, Massachusetts-based managed care membership has grown from 668,000 members at the end of the first quarter 1996 to 674,000 at the end of June 1996. During this period, the company, working with other New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. Blues, has sold its New England Managed Care product to more than 27,000 regional members. Van Faasen continued, "Over the past six years, we have moved from being a traditional indemnity Recompense for loss, damage, or injuries; restitution or reimbursement. An indemnity contract arises when one individual takes on the obligation to pay for any loss or damage that has been or might be incurred by another individual. health care insurer to being a major player in the managed care market. Managed care is the future of the health care business and we expect to see continued, profitable growth in the company's managed care operations in Massachusetts and throughout New England." Blue Cross and Blue Shield of Massachusetts is the region's largest health services health services Managed care The benefits covered under a health contract company, providing a full range of managed care and traditional benefits, products and services to business and individual customers, to health care providers and to federal, state and local governments. Blue Cross and Blue Shield of Massachusetts is an independent licensee licensee n. a person given a license by government or under private agreement. (See: license, licensor) LICENSEE. One to whom a license has been given. 1 M. Q. & S. 699 n. of the Blue Cross and Blue Shield Association
CONTACT: Blue Cross and Blue Shield of Massachusetts Joe Macrum, 617/832-3313 or Susan Leahy, 617/832-4823 |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion