MINNEAPOLIS (AP) -- Minnesota's HMOs showed a surplus of almost $20 million last year after two years of losing money, according to a survey by a managed care industry analyst.
Most of the profit came from investments, not medical care, according to the annual survey of managed care by industry analyst Allan Baumgarten of Minneapolis.
Almost all had operating losses, in spite of average premium increases of 11.7 percent, according to the survey of all 11 licensed HMOs in Minnesota.
Enrollment in the organizations dropped by about 42,000. Some of those enrollees switched to self-insured plans, which a growing number of employers have chosen to save money and offer more flexible benefits.
The number of Minnesota seniors in HMOs dropped by 8,000, as two of the Medicare HMOs cut back their service areas and provider networks. Baumgarten predicted that one or both will announce further cutbacks next month.
On average, the monthly premium rose by $15 in 1999, to $147 per person.
Overall, Minnesota's 11 HMOs had a total of $20 million in operating losses, but earned twice that amount from investments.
''These are difficult times for health care organizations in Minnesota,'' Baumgarten wrote in his report, Minnesota Managed Care Review 2000. He said much of what HMOs used to manage -- premiums, use of services and benefits -- is now out of their control.
Baumgarten also wrote that HMOs' image is suffering in Minnesota.
An HMO industry spokesman says the industry is merely going through a cycle, and that its outlook is brighter than the report suggests.
''Certainly, the picture is much better this year,'' said Kirby Erickson, president of the Minnesota Council of Health Plans. He predicts that, in spite of this year's operating losses, the HMO business ''should turn profitable for all of us over the next two years.''
Baumgarten found that the three biggest HMOs in Minnesota all ended 1999 in the black, with surpluses of $10 million for HealthPartners of Bloomington, $8 million for Blue Plus (part of Blue Cross and Blue Shield of Minnesota of Eagan) and $3.7 million for Medica of Minnetonka.
Throughout the state, several smaller HMOs reported year-end losses, including the Mayo Clinic HMO in Rochester, Minn. with a $1.6 million loss, Preferred One of Minneapolis with a $1.9 million loss, and Sioux Valley in Sioux Falls, S.D., with a $403,000 loss.
The report says that the biggest profits were made on Medicaid HMO plans, which serve low-income and disabled enrollees. Those profits jumped to $57.4 million last year, from $33.8 million the year before.
Baumgarten compiles the report annually to sell to industry subscribers.
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