News and Commentary

More HMOs to fold, consolidate in 2001


More than six dozen HMOs have characteristics that put them in danger of going out of business, according to projections by InterStudy publications. InterStudy looked at specific operational aspects of HMOs that shut down in 1999 and determined that 75 now operating fit the same mold. These characteristics of plans that ceased operations are significantly different from better-performing HMOs:

  Ceased operation in 1999
(Averages)
Rest of HMO industry
(Averages)
Enrollment per plan 31,600 142,428
Medical loss ratio 92.3% 88.5%
Administrative expense ratio 17.4% 14.1%
Operating profit/loss –11.8% –1.1%
Days of unpaid medical claims 61 55
SOURCE: NATIONAL HMO FINANCIAL DATABASE, INTERSTUDY PUBLICATIONS, ST. PAUL, MN., 2000

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