$15 million gain posted by Blues

November 16, 1994|By John Fairhall | John Fairhall,Sun Staff Writer

Proclaiming success in controlling patient costs, Blue Cross and Blue Shield of Maryland yesterday reported a profit of $15.9 million for the third quarter of 1994, a 279 percent increase over the same period last year.

Revenues for the period that ended Sept. 30 were $463 million, a 5.7 percent decrease that company officials attribute partly to rate cuts this summer. "It's something we're certainly focusing on," said Controller Gary C. Baker.

Profits for the third quarter included $12.2 million from the company's traditional indemnity insurance business and $3.7 million from its five HMOs.

The number of consumers enrolled in HMOs increased about 3 percent in the quarter, Mr. Baker said. Blue Cross and Blue Shield is striving to expand its HMO business, which had revenues of $126 million in the quarter.

Some of the increase in HMO enrollment represents a shift of consumers from the company's traditional insurance plans, which have lost other customers as well. When NationsBank Corp. purchased Maryland National Bank, for example, it replaced Blue Cross and Blue Shield of Maryland with Cigna.

Company officials would not disclose enrollment in their traditional plans. Overall, the company insures or administers insurance for 1.4 million Marylanders.

"I think what our third-quarter results show is our success in managing care," Mr. Baker said, referring to the company's efforts to restrain medical costs.

Mr. Baker also boasted of "improved liquidity" and noted that reserves -- a pool of money set aside for unanticipated claims -- reached $148 million as of Sept. 30, an $18 million increase since June 30. Reserves were $98 million at the end of 1993, after having sunk as low as $9 million in December 1992.

But the company's nonmedical expenses remain higher than officials would like, at 11.3 percent of premiums for its indemnity business. "We have been targeting them downwards," Mr. Baker said. "The trend this year compared to last has improved slightly."

Company officials said they expect Blue Cross and Blue Shield to continue to be profitable and competitive, partly as a result of cuts in prices this year.

"During the third quarter of 1994, the company was able to reduce premiums for many of our customers because of ongoing efforts to streamline operations and control costs," said William L. Jews, president and chief executive of Blue Cross and Blue Shield.

Last month, the insurer announced that it would cut its rates by 7 percent to 15 percent for most of its customers, effective Nov. 1. In July, the Blues slashed some prices up to 30 percent for coverage aimed at the small-business market. The company has also trimmed jobs. Three weeks ago, Blue Cross and Blue Shield said it would eliminate 350 jobs, or more than 9 percent of its work force, by the end of the year.

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