HMO profit down 41% in Q3

MANILA, Philippines — The profitability of health maintenance organizations (HMOs) deteriorated in the third quarter due to an overall increase in their expenses, especially in benefit payouts to policyholders.

The Insurance Commission (IC) yesterday reported that HMO profit dropped by nearly 41 percent to P4 billion from a year ago’s P6.77 billion, as the growth in their expenses outpaced that of their revenues.

During the period, HMOs expanded their claims payout by about 24 percent to P23.8 billion, from P19.2 billion.

Notably, many areas in the Philippines tightened to a lockdown in August to contain the spread of the Delta variant at that time.

On the other hand, revenues collected by HMOs went up by close to three percent to P39.27 billion, from P38.27 billion. Their capital stock also jumped by more than 17 percent to P3.22 billion, from P2.75 billion, based on IC data.

IC Commissioner Dennis Funa said the total equity held by HMOs also rose by over 17 percent to P15.22 billion in the third quarter from P12.99 billion a year earlier.

“According to the unaudited reports, this increase in total equity was due to an increase in retained earnings by 14.45 percent, which comprise 77.28 percent of HMOs’ total equity for the third quarter of 2021,” Funa said.

Broken down, assets managed by HMOs grew by almost 28 percent to P63.21 billion as investments made in subsidiaries, associates and joint ventures, as well as in properties, paid off for them during the stretch.

Similarly, liabilities owed by HMOs ballooned by above 31 percent to P47.98 billion. The jump was attributed by industry players to an increase in their health plan liabilities, administrative services only fund and deferred tax liabilities.

The IC regulates and oversees the operations of HMOs through the issuance of Executive Order 192 issued in 2015.