Fallon Community Health Plan reports 2009 financial results
Worcester, Mass., February 26, 2010―Fallon Community Health Plan (FCHP) today reported a net loss of $29.4 million on revenue of $1.1 billion for the fiscal year that ended December 31, 2009, compared with a net income of $6.7 million on revenue of $1 billion in 2008. Net income includes investment income of $8.7 million and an operating loss of $38.1 million. For the fourth quarter, FCHP posted a net loss of $13.1 million, compared with a net loss of $1.2 million for the same quarter in 2008. At the same time, membership increased to 228,044 as of December 31, 2009, compared with 216,463 ending December 31, 2008.
“Our continued efforts to ensure our customers get the greatest value for their premium dollar resulted in our third consecutive year of membership growth,” said Charles Goheen, Executive Vice President and Chief Financial Officer for FCHP. “But, like so many other businesses, 2009 was a financially challenging year for us -- one that was made even more difficult by the dynamics of the state’s health care marketplace.”
According to Goheen, factors that contributed to FCHP’s financial results included:
- Steady increases in provider unit costs and increases in the use of high-cost technologies (separate reports recently released by Attorney General Martha Coakley and the state Division of Health Care Finance and Policy cited the rates doctors and hospitals charge as the major reason for increases in health insurance premiums).
- Government funding that’s not keeping up with the increasing costs of certain government insurance programs.
- Higher than expected medical expenses, particularly within the merged individual and small business market.
- FCHP’s investment in its new core business system, which goes on line during the first quarter of 2010. In response to increasingly complex and changing business processes and regulatory requirements, the system upgrade is being done to provide more efficient and flexible tools, to better support business and marketplace needs, and to provide even greater administrative efficiencies to customers.
“We’re staying focused on those areas we can directly influence, such as keeping our administrative expenses below 10 percent and working with members and their health care providers to find better ways of eliminating duplicative, unnecessary, or inappropriate care, while also supporting initiatives that improve the quality of care,” said Goheen. “But the fact remains that we spent more than 90 cents of every premium dollar to pay for our members’ medical services, such as doctor visits, prescription drugs and hospital stays. And, as recent reports clearly show, insurance premiums and medical costs are inextricably linked. When the vast majority of the health care dollar is directly spent on paying doctors and hospitals for the services they provide, then making health care affordable needs to start with the cost of medical care.”
Looking to the future, Goheen said FCHP will continue building on its strengths, namely its demonstrated ability to be responsive to its customers and to develop cost-effective, high-quality products and services.
“It’s not by accident that FCHP is one of this country’s top health plans. We have products, services and benefits that provide the type of health care value our customers are looking for,” said Goheen. “We’re a strong, mission-focused organization and we’ll continue to focus on those areas that we have the ability to manage. We’ve reviewed all of the factors that have contributed to our financial performance and have been taking additional steps for the past six months to implement new procedures and processes to better control the medical trend. As always, we continue to aggressively manage our administrative expenses so that we can keep operating in the most cost-efficient manner possible. We also will continue to advocate for changes, such as provider payment reform, that will go a long way in bringing down health care costs for everyone.”
FCHP’s major achievements during 2009 include:
- Being recognized as one of the country’s top 10 health plans—and the only health plan in America to achieve Honor Roll status in all three product categories (commercial, Medicare and Medicaid)—in a joint ranking by U.S. News & World Report and the National Committee for Quality Assurance. In addition, FCHP is the highest-ranked Medicare health plan in Massachusetts.
- Launching NaviCareSM HMO, a Medicare Advantage plan and a Senior Care Options program. NaviCare HMO supports the health care needs of those age 65 and over in Worcester County who are enrolled in MassHealth Standard. It combines in one package all Medicare and Medicaid benefits, as well as additional benefits and services designed to promote independence and quality of life.
- Expanding the provider network for its FCHP Select Care HMO product, adding provider groups in the Merrimack Valley and North Shore areas of Massachusetts, and expanding into southern New Hampshire to give Massachusetts-based companies more choice and greater access.
- Launching the Family Fun program to provide members with savings of up to $250 through free child admissions and other discounts at local, family-oriented places.
- Being recognized by Pioneer Institute with “Special Recognition” in the Institute’s 2009 Better Government Competition for demonstrating how to reduce cost trends while maintaining quality through the combined use of a limited network and a defined contribution strategy.
NCQA is a private, non-profit organization dedicated to improving health care quality.
Lauren M. Petit
lauren.petit@fchp.org
About Fallon Community Health PlanFounded in 1977, Fallon Community Health Plan is a nationally recognized, not-for-profit health care services organization. From traditional health insurance products available throughout Massachusetts for all populations, to innovative health care programs and services for independent seniors, FCHP supports the diverse and changing needs of all those it serves. FCHP has consistently ranked among the nation’s top health plans, and is the only health plan in Massachusetts to have been awarded “Excellent” Accreditation by the National Committee for Quality Assurance for its HMO, Medicare Advantage and Medicaid products.