BEN SULLIVAN Staff Reporter
Los Angeles HMOs spend among the most and least in the state on medical care, according to the California Medical Association's annual survey of the industry.
The study looks at how much of every premium dollar an HMO actually spends on medical care. Data comes from reports filed by the health plans with the state Department of Corporations, which regulates the HMO industry, and from filings with the U.S. Securities and Exchange Commission.
Pasadena's Kaiser Foundation Health Plan, which operates throughout the state and is the largest HMO in L.A. County, came out on top, with 96.6 percent of its premium revenue going to medical costs. That figure is far above the expenditures of nearly every other HMO in the state.
The nearest runner-up locally is Prudential HealthCare of Woodland Hills, which spent just under 89 cents of every premium dollar on health care. InterValley Health Plan in Pomona turned in an 87.9 percent expenditure on medical costs.
By contrast, CaliforniaCare Health Plans in Woodland Hills, run by WellPoint Health Networks Inc., spent just 76.3 percent of its premium revenue on health care, making it the next-to-lowest-spending HMO in the state, after tiny Chinese Community Health Plan based in San Francisco.
Scan Health Plan of Los Angeles and Molina Medical Centers had relatively low expenditures as well, with 77.8 and 79.7 percent respectively.
Twice as many HMOs in the state have increased their percentage spent on care as have decreased their percentage since the California Medical Association began keeping tabs in 1992.
An exception in L.A. is Health Net, operated by Woodland Hills' Health Systems International, which spent 80.8 percent of premium revenue on medical costs in 1992, and just 80.1 percent in 1995. During the same period, however, its profit margin rose from 4.4 percent to 8.3 percent of revenue.
L.A. HMOs were also well-represented among top executive compensation packages in 1995, which was the year scrutinized by the study. HSI President Malik Hasan was paid $1.9 million in salary, bonuses and retirement contributions in 1995, Maxicare Health Plans President Peter Ratican got $1.85 million, and former WellPoint CEO Leonard Schaeffer, who has since stepped down, garnered $1.1 million.
Costs vs. expenses
A study out of the Sherman Oaks office of The Wyatt Company, a human resources consultancy, says that although medical inflation is slowing in the United States, overall health care costs continue to skyrocket.
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