Highmark Health recorded a $64 million operating profit for 2016, bouncing back from a $565 million loss in 2015, in a dramatic turnaround driven by a return to profitability in its government business unit.
Overall, Highmark Health delivered “a strong financial performance” in 2016, said Highmark Health President and CEO David Holmberg in a telephone media briefing Friday. He added that he sees the organization well positioned for “an even bigger and better” 2017.
Highmark Health includes the health giant’s book of insurance business, the Allegheny Health Network provider network, a diversified businesses unit and a technology services unit. It reported operating revenue of $18.23 billion in 2016, compared with $17.67 billion the year prior.
Overall, Highmark Health delivered a $59 million net profit for 2016 following an $85 million loss the prior year. The company has $6.5 billion in cash and investments and net assets of $5.2 billion.
The government business unit, which includes small group, Medicare, Medicaid and Affordable Care Act marketplace plans, saw a $22 million profit for 2016, versus a $614 million loss in 2015.
Highmark had been hit hard in the first years of the marketplace. In addition to seeing costs outpace revenue premiums, Highmark and other insurers received only 12.6 percent of the federal funding expected under the risk corridors program that was supposed to help insurers cover a portion of their losses during the marketplaces’ first three years.
Highmark has sued in the U.S. Court of Federal Claims to recover that revenue.
Highmark Health Plan President Deb Rice-Johnson cited a combination of approved rate increases, a narrowing of its network and adjustments in patient management as reasons for the improved performance.
The commercial business, meanwhile, recorded a $220 million profit and had a 96 percent member retention rate.
The eight-hospital Allegheny Health Network reported a $39 million loss for the year following a $36 million loss in 2015, which CFO Karen Hanlon attributed to the implementation of an electronic health record system, as well as recruitment of physicians and support staff.
Two units saw profits drop: The diversified business unit, which includes United Concordia Dental, HVHC, Inc. vision and HM Insurance Group stop loss business, had a $163 million profit, down from $216 million in 2015, while the HM Health Solutions technology services recorded a $4 million profit, compared with $7 million in 2015.
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