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MEDICA ANNOUNCES POSITIVE FINANCIAL RESULTS FOR 1991

 MEDICA ANNOUNCES POSITIVE FINANCIAL RESULTS FOR 1991
 MINNEAPOLIS, April 1 /PRNewswire/ -- For the third consecutive year,


Medica strengthened its financial reserves while maintaining competitive premium rates and paying more in benefits to its members.
 Medica added $36 million to reserves at the end of 1991 on revenues of $789 million. Of the reserved amount, $1.52 million came from interest on existing reserves, $6 million came from a one-time, non- recurring extraordinary item associated with the federal Health Care Financing Administration, and $15 million came from premium income.
 "This contribution to reserves provides continued assurance to our 540,000 members of the financial security of their health care organization," said K. James Ehlen, M.D., Medica chairman and chief executive officer. "This is particularly important in light of last week's announcement by the Minnesota Department of Commerce that 118 insurance companies are on the watch list for potentially inadequate reserves and possible insolvency."
 Under state law, Medica is required to contribute to reserves on an annual basis to assure the financial stability of the health plan.
 "While state law requires us to have one month of operating surplus in reserve, we have established more conservative reserve requirements to protect our enrollees," Ehlen said. "With this year's contribution to reserve, Medica has an operating surplus of 1.3 months."
 P. Robert Larson, Medica president and chief operating officer, said that interest earned from reserves is increasingly contributing to Medica's income and helping moderate increases in premiums. He said Medica premium increases in 1992, on average, are below the expected inflationary rise in health care costs.
 Larson added that the two percent of premium revenue that was put into reserves in 1991 is an appropriate amount to build reserves and is in line with other Twin Cities HMOs.
 "The increase of our reserve strength is important because it guarantees the company's financial stability for our members, our participating physicians and hospitals, and the marketplace."
 Ehlen also pointed out the plan has seen "positive results from the use of managed care programs during 1991 among the 4,000 fee-for-service physicians of Medica Choice and the capitated primary care clinics of Medica Primary.
 "Physicians are supporting practice guidelines that promote continuous quality improvement and assure purchasers and plan members that they are receiving necessary medical care in efficient, cost- effective ways," Ehlen said.
 "Recent regional studies have recognized the substantial savings in premium costs in the Twin Cities that result from the use of managed care. Bolstering our financial stability will allow us to continue to be at the forefront in providing cost-effective, quality care for all Minnesotans," Ehlen concluded.
 Medica provides coordinated health care services to its 540,000 members who include 41,000 Medicaid and 83,000 Medicare beneficiaries.
 -0- 4/1/92
 /CONTACT: Peter Fish of Medica, 629 9.i.mr f bc-Scottish-Heritable
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Publication:PR Newswire
Date:Apr 1, 1992
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