Highmark, the biggest Blue Cross Blue Shield provider in Delaware, announced it is in solid financial shape as it works to turn around a health care network in western Pennsylvania.
This comes after the health care organization’s board last month replaced CEO William Winkenwerder with David L. Holmberg. Winkenwerder had been with Highmark for two years as CEO. Holmberg had headed entities of Highmark that included its VisionWorks optical stores.
The Pittsburgh-based organization reported more than $7 billion in cash and investments and a surplus of nearly $6 billion as of December 31, 2013. Highmark now ranks as the nation’s third-largest integrated health care delivery and financing network.
“Highmark Health has a strong financial foundation to invest in the future and work on behalf of our members and the community to develop innovative health care products and services, manage costs, improve quality and create an outstanding customer experience,” said Karen Hanlon, Highmark Health senior vice president of finance. The organization reported at an overall operating loss for 2013 of $186 million, driven by a charge of $311 million in writing down the value of Alleghany Health Network and its hospitals.
“Highmark Inc. is well capitalized and experienced operational performance very similar to the prior year with total revenues of $14.9 billion,” said Hanlon. “The numbers appear to show a drop in net income, but that is because of the assets we acquired from our affiliation from the Delaware health plan in 2012. Overall, 2013 showed sound financial performance.”
Highmark Health serves as the parent company of Highmark Inc., which provides health insurance, dental insurance, vision care, stop loss insurance and other related health products and services; and Allegheny Health Network, which includes eight hospitals, physician organizations, a group purchasing organization and ambulatory surgery centers.
“Highmark Inc. is well capitalized and experienced operational performance very similar to the prior year with total revenues of $14.9 billion,” said Hanlon. “The numbers appear to show a drop in net income, but that is because of the assets we acquired from our affiliation from the Delaware health plan in 2012. Overall, 2013 showed sound financial performance.”
Highmark Inc.’s health plans continued to be market leaders in 2013 throughout Pennsylvania, Delaware and West Virginia, serving 5.3 million people. Operating margin as a percentage of health plan revenue was 1.5 percent. The health plans spent 90 cents of every premium dollar for the care of members.
Highmark Inc.’s diversified businesses in dental insurance, vision care and supplemental health products had a strong year and contributed more than half of the company’s 2013 operating margin.
Combined, the three diversified businesses had a net income of $168.5 million. The Highmark Inc.’s vision companies contributed $52.9 million while the United Concordia Companies dental business contributed $68.7 million, and HM insurance Group, which provides supplemental health products, provided $46.9 million.
At year-end 2013, Allegheny Health Network incurred a net loss of $107 million.
“Allegheny Health Network has made progress in strengthening its financial position,” said Hanlon. “The results do not include a full year for each of the hospital affiliations from 2013 but rather a partial year based on the effective date of each affiliation as we move to align the organization on a calendar year.”
Significant investments at Allegheny Health Network were made in 2013 to improve the quality and cost of care, Highmark officials noted.
