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January 15, 2005
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MHMR January 15, 2005; Volume 13, Number 1
SPECIAL REPORT: OUTLOOK 2005...20 top execs on 2005 outlook...’04 MCOs margins near 5%...’05 profits to grow 4-5%...MCOs pricing ahead of costs...Wall Street mostly upbeat...Borsch tops in ’04 stock picks...Class action to move forward...MCO stocks beat Street in ‘04...CareFirst appeals DE separation...MN ’05 costs to rise 15%...BCBS-FL ratings upgraded...CA premiums rise 11.4% in 2004...WellPoint integration under way...Cigna HMOs get upgraded...Cigna settles specialty suit...Harvard eyes national gains...Centene wins KS, OH pacts...Humana adds 14 Medicare PPOs...Aetna expands Medicare...Amerigroup buys CarePlus...PacifiCare buys AMSG...UnitedHealth posts 4Q04 gains...Group Health taps Ostrem...HMO, services stocks up...Magellan to gain on Aetna sale...Matria eyes 61% ’05 EPS gain...American Healthways net doubles...Express Scripts names Paz CEO...and more...
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CAREFIRST APPEALS DELAWARE SEPARATION
CareFirst Inc. (Bethesda, MD) appealed to the Delaware Supreme Court seeking to overturn the state insurance commissioner’s June 2004 order that the company sever its affiliation with Blue Cross Blue Shield of Delaware.
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MN EXPECTS ’05 HEALTH COSTS TO RISE 15%
The state of Minnesota expects single monthly healthcare costs to rise 15% to $369 in 2005 for its self-insured Advantage Health Plan program, according to data from the Dept. of Employee Relations.
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BCBS-FL RATINGS UPGRADED BY MOODY’S
Ratings firm Moody’s Investors Service (New York) upgraded the financial strength and surplus notes ratings of Blue Cross Blue Shield of Florida (Jacksonville, FL), citing dramatically improved profitability.
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CA PREMIUM RATES RISE 11.4% IN 2004
California premium rates for fully funded healthcare insurance rose 11.4% in 2004, compared to a 15.8% increase in 2003, according to the California HealthCare Foundation and Health Research and Educational Trust (Oakland, CA).
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WELLPOINT INTEGRATION UNDER WAY
WellPoint Inc. (Indianapolis) is wasting no time in consolidating the former Anthem and WellPoint Health Networks organizations.
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CIGNA HMOs GET UPGRADED FINANCIAL STRENGTH RATING
Citing “refocused underwriting, streamlined administration and revised medical management,” ratings firm A.M. Best (Oldwick, NJ) has upgraded the financial strength ratings of several HMOs of Cigna Corp. (Philadelphia).
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CIGNA SETTLES SPECIALTY PROVIDER SUIT FOR $11.6 MM
Cigna Corp. (Philadelphia) will pay specialty providers $11.6 million as part of a settlement in a class action lawsuit brought on behalf of 210,000 specialty healthcare providers who claimed they were systematically shortchanged on claims payments.
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CENTENE WINS KS, OH MEDICAID BEHAVIORAL CONTRACTS
Centene Corp. (St. Louis) said it will generate $4 million in 2005 from new contracts in Kansas and Ohio to provide behavioral healthcare services to Medicaid and Children’s Health Insurance Program recipients.
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AETNA TO ADD 4 MEDICARE ADVANTAGE COUNTIES IN NJ, MD
Aetna Inc. (Hartford, CT) will offer Medicare Advantage coverage in four new counties in New Jersey and Maryland and expand options in five other counties in these two states plus Pennsylvania. New counties in New Jersey include Burlington, Gloucester and Morris.
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UNITEDHEALTH POSTS 46% GAIN IN 4Q NET INCOME
UnitedHealth Group (Minnetonka, MN) reported fourth-quarter 2004 net income of $739 million, up 46% from the same period a year earlier, on revenues of $10.511 billion, up 40%.
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GROUP HEALTH NAMES OSTREM VP, EASTSIDE
Group Health Cooperative (Seattle) has named Jill Ostrem vice president, eastside, to spearhead the company’s expansion into East King County. Plans include a $100 million specialty facility as well as new primary care facilities.
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MAGELLAN EXPECTS $50 MM GAIN ON AETNA ASSET SALE
Magellan Health Services (Farmington, CT) said it expects to record a $50 million one-time gain associated with the sale of certain assets to Aetna (MHMR, Dec. 15). Magellan will simultaneously repay a $49 million note to Aetna when the deal closes on Dec. 31, 2005.
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MATRIA EXPECTS 61% INCREASE IN ’05 EPS
Matria Healthcare (Marietta, GA) is projecting a 61% increase in 2005 earnings per share to between $1.55 and $1.70 ($16.7 million to $18.4 million based on 10.8 million shares outstanding). Revenues are expected to be in the $335 million to $340 million range.
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AMERICAN HEALTHWAYS DOUBLES FISCAL 1Q05 NET
American Healthways (Nashville, TN), a disease management company, reported net income of $7.762 million for the fiscal first quarter ended Nov. 30, up 96% from the same period a year earlier.
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MANAGED CARE EXECUTIVES SEE STEADY GAINS IN 2005
Managed care industry executives interviewed by MHMR said they expected continued strong financial performance in 2005, despite a slowdown in premium rate hikes and continued frustration on the part of employers regarding the cost of healthcare.
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MCO PROFIT MARGINS NEAR 5% IN 2004
Managed care industry profit margins rose to 4.8% among 15 publicly traded managed care organizations through the first nine months of the year, compared to the same period a year earlier.
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WALL STREET ANALYSTS MOSTLY UPBEAT ABOUT ‘05
Managed care analysts interviewed by MHMR remained mostly upbeat on the managed sector in 2005, with the exception of Matthew Borsch of Goldman Sachs who remains neutral on the sector in general.
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BORSCH TOPS ANALYSTS IN ’04 HMO STOCK PICKS
Matthew Borsch of Goldman Sachs (New York), who chose Aetna as his lone managed care stock pick in 2004, beat out seven other analysts surveyed by MHMR with an 85% return for the year.
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SUPREME COURT DECLINES TO REVIEW HMO CLASS ACTION
It looks like 2005 will finally be the year when managed care organizations have to face a trial in a class action lawsuit brought by more than 900,000 physicians who claim they have been systematically short-changed by managed care plans on claims payments.
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MANAGED CARE STOCKS RISE 4%
Managed care stocks got off to a strong start in 2005, rising 4% in the two weeks ended Jan. 14, according to an MHMR tally of 19 issues.
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