Categorized | Business

HMSA ends 2010 with net income of $5.27 million

MEDIA RELEASE

The Hawaii Medical Service Association (HMSA) has announced that fourth-quarter earnings resulted in net income after taxes of $5.27 million, or 0.3 percent of total revenue.

A net underwriting loss of $26.38 million in 2010 was offset by $28.15 million of investment and other income.

Health care costs in 2010 increased by $39.81 million over 2009. HMSA’s total payments to health care providers in 2010 were $1.62 billion.

On average, HMSA paid physicians, hospitals, pharmacies, and other health care providers more than $135 million per month last year. This represents one of the highest per-month payment levels in the past four years.

“It’s encouraging to see our operating loss decline and to achieve a positive bottom line,” said HMSA Executive Vice President and Chief Financial Officer Steve Van Ribbink. “In 2010, revenue exceeded $1.76 billion, and provider reimbursements accounted for 92 percent of that. If not for a strong fourth quarter, we would have seen a net loss for the year. Fortunately, we experienced an improved return on our investments and a small decline in health care costs.”

At the end of 2010, HMSA had 676,801 members and maintained a health plan reserve of a little more than $389.6 million. On average, the HMSA reserve equals $576 per member.

The HMSA reserve is used to protect members from financial losses and community health emergencies, such as a disease outbreak or natural disaster. It is also used to fund important health initiatives that affect members and the community.

HMSA reorganized business functions for increased efficiency, continued green initiatives for both energy and cost savings, maintained a freeze on hiring (except for critical positions), and continued a freeze on executive compensation.

Total annual compensation for HMSA’s president and chief executive officer was $855,331, a reduction of 32.2 percent over the previous year.

Executive compensation consists of a base salary and performance incentives set by the board of directors, including measures focusing on the delivery of high-quality health care, outstanding customer service, value to the community, and overall financial performance.

The 2010 incentive pay was based on measures met in 2009, paid in 2010, and reported in 2011. The decrease in executive compensation reflects the impact of weak economic conditions experienced locally and nationally in 2009.

HMSA is a nonprofit, mutual benefit association founded in Hawaii in 1938. It is governed by a community board of directors and includes representatives from health care, business, labor, government, education, clergy, and the community at large.

HMSA is a member of the Blue Cross and Blue Shield Association, an association of independent Blue Cross and Blue Shield plans. Nationally, HMSA and 38 other Blue Cross and Blue Shield plans provide worldwide coverage to more than 100 million members.

— Find out more:
www.hmsa.com

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