This is Why the Health Maintenance Organization (HMO) Industry Lost PHP 1.44 Billion Last Year
The net loss experienced by the HMO industry last year happened despite revenue improving by 6%. We delve into what caused the loss and how it will affect Filipinos.
Did you know that the health maintenance organization (HMO) industry recorded a PHP 1.44 billion loss last year? This is a massive drop considering that the industry earned an income of PHP 5.14 billion in 2021.
According to a report by Philstar, said net loss happened despite last year’s revenue improving by 6% to P56.51 billion. The increase in revenue is due to an increase in membership fees, which comprises 98% of the industry’s revenue. These numbers are based on data from the Insurance Commission (IC).
But how is the HMO industry losing money despite the increase in revenue? In this article, we delve into why that happened.
What Caused 2022’s Net Loss?
For context, Investopedia defines an HMO as “an insurance structure that provides coverage through a network of physicians.” Simply put, it allows people to receive medical help for a fraction of the price since this is usually subsidized by their employers.
“Last year’s net loss was attributed to the higher benefits and claims released by 25 HMO firms covered in the report, which jumped by 34% to PHP 43.76 billion from PHP 32.72 billion in 2021,” Philstar notes in its report.
Eight of the 25 HMO firms incurred net losses. These include:
- EastWest Healthcare Inc.
- Forticare Health Systems International Inc.
- Health Care and Development Corp. of the Philippines
- Health Delivery System Inc.
- Insular Health Care Inc.
- Maxicare Healthcare Corp.
- Medicard Philippines Inc.
- Optimum Medical and Health Care
Among the eight, Maxicare Healthcare Corp. had the highest net loss amounting to PHP 1.33 billion. Maxicare is followed by Medicard Philippines Inc., which recorded a PHP 955.63 million loss.
As for the number of benefits and claims released last year, Medicare also tops the list with the most benefits and claims released, amounting to PHP 18.67 billion. Maxicare again placed second with PHP 7.49 billion.
The Relevance of HMOs During the Pandemic
HMOs played a critical role in helping out the Filipino people during the COVID-19 pandemic, particularly those who had gotten sick. “Firms regulated by the [Insurance Commission] IC issued more than PHP 20 billion in COVID claims since the start of the pandemic, with HMOs accounting for over a third,” the Philstar report notes.
“HMOs are the second largest contributor to COVID-19-related payouts by the IC’s regulated entities since COVID started,” it adds.
Now that the pandemic “no longer constitutes a public health emergency of international concern,” according to the World Health Organization (WHO), there is a possibility that the COVID-19 claims issued by HMOs will lessen—should the country control the transmission of the virus moving forward. This can help them profit once more by the end of 2023.
Moreover, it should be noted that the claims and benefits released by HMOs in 2022 that led to their net loss in income are not purely COVID-related claims.
Given that HMOs have been financially helpful to millions of Filipinos in times of sickness, healthcare companies can focus their efforts on attracting more people into applying for HMOs in order to increase their profits once more. This is a win-win situation that benefits both HMOs, who will gain profit from an increase in users, while the Filipinos themselves can get the proper healthcare assistance in their time of need.