A new Bloomberg Government study shows that although insurance companies spent millions of dollars trying to defeat government healthcare reform, their profit margins have widened to levels not seen since the legislation was passed in 2008.
Companies including UnitedHealth Group Inc.—a Minnetonka, Minn.-based company with more than 3,000 workers in Cypress—saw average operating profit margins expand to more than 8% in the six quarters since healthcare reform became law, according to the study. That compared with less than 7% on average for the companies for the 18 months before it passed.
The study also showed insurers’ average quarterly per-share profit from continuing operations between third-quarter 2008 and third-quarter 2011 rose 29%, with results regularly exceeding analyst expectations.
“The industry that was the loudest, most persistent critic of this law, the industry whose analysts and executives predicted it would suffer immensely because of the law, has thrived,” said Peter Gosselin, a senior healthcare analyst for Bloomberg Government and the author of the study. “There is a shift to government work under way that is going to represent a fundamental change in their business model.”
The study noted that healthcare insurers are changing their business focus in order to gain from parts of the healthcare reform law that will expand the size of Medicaid, the $401 billion state- and federally funded healthcare plan for impoverished Americans.
“Only by substantially reshaping their businesses can they profit,” Bloomberg Government’s study said.
Representatives of large insurers largely remained silent about the study or referred Bloomberg to America’s Health Insurance Plans, a Washington, D.C.-based lobbying group, for reaction.
“We remain very concerned that major healthcare reform provisions that go into effect on Jan. 1, 2014 will raise costs and disrupt coverage for individuals, families, seniors and small businesses,” Robert Zirkelbach, an America’s Health Insurance Plans spokesperson, told Bloomberg after he read the study.
Health insurance companies contributed $86.2 million to the U.S. Chamber of Commerce to oppose reform after officials in President Barack Obama’s administration criticized them for enriching themselves by raising members’ premiums, according to Bloomberg.
Questcor Sales
Anaheim-based drug maker Questcor Pharmaceuticals Inc. saw its shares rise last week after it reported sales of its sole drug that exceeded analyst projections.
Questcor said that it shipped 3,360 vials of its H.P. Acthar Gel in the fourth quarter, compared with 1,680 shipped in 2010’s fourth quarter. Acthar, an injectable gel, is used to treat multiple sclerosis flare-ups, as well as for treating kidney disorder nephrotic syndrome and infantile spasms, a very rare form of epilepsy.
The drug maker said it filled between 935 and 950 paid prescriptions for Acthar in multiple sclerosis flare-ups; almost triple the number in 2010’s fourth quarter. New paid prescriptions for nephrotic syndrome totaled 140 to 150 in the quarter, while infantile spasm prescriptions came in at 120 to 125.
Biren Amin, an analyst with Stamford, Conn.-based Jefferies & Co., said in a research note that the new prescriptions for nephrotic syndrome exceeded his estimates by 25% to 34%.
Amin said that growth “more than offset softness in multiple sclerosis,” where prescriptions fell short of his estimates.
Amin also said he estimated Acthar fourth-quarter sales of $69.1 million, higher than consensus expectations of $66 million.
Questcor is set to release its fourth-quarter and 2011 results on Feb. 22. Analysts are expecting it to post a profit of $23.1 million on revenue of $67.4 million.
CareMore Center
CareMore Health Plans, a health maintenance organization for senior citizens with headquarters in Cerritos, opened a care center in Santa Ana. The health plan said the center will combine wellness activities with medically supervised activities and protective health services to seniors at risk for chronic conditions such as diabetes, chronic obstructive pulmonary disease and congestive heart failure. Other services to be offered by the center include podiatry, diabetes education and management, and blood- pressure, among others.
Bits and Pieces
St. Joseph Hospital-Orange received an award from the Premier Healthcare Alliance’s Quest high-performing hospital collaborative.
The hospital said it would receive an undisclosed monetary award for its performance, including reducing avoidable hospital mortalities and safely reducing the cost of care for each patient’s hospitalization. … Tustin cancer testing company Radient Pharmaceutical Corp. said in a federal filing that it raised $7.5 million from five private investors. Radient makes Onko-Sure, a cancer diagnostic test. … Humana Inc., a Louisville, Ky.-based health plan, said it bought MD Care Inc., a Signal Hill-based Medicare Advantage HMO with 15,000 members in Orange, Los Angeles, San Bernardino and Riverside counties. A purchase price wasn’t disclosed.
