HMO industry faces sales threat as economy suffers recession due to pandemic
MANILA, Philippines — Mostly corporate customers have retained their membership with health maintenance organizations (HMO) amid the coronavirus disease (COVID-19) pandemic, but closure of businesses and job losses as the economy suffers a recession may cut sales moving forward, the industry group Association of Health Maintenance Organizations of the Philippines Inc. (AHMOPI) said.
“While the country’s enhanced community quarantine (ECQ) and restrictions on face-to-face transactions hampered to a great extent securing new sales, it will be noted that the bulk or even the entire business portfolios of most HMOs are corporate accounts which normally purchase healthcare plans on a fiscal year basis as part of their employee-benefits programs—in mid-December last year to January this year, even before the ECQ,” AHMOPI executive director Carlos D. Da Silva told the Inquirer last week.
As far as retention business is concerned, however, there seems to be a spike to date for obvious reasons — COVID-19 spotlights the need for HMO healthcare coverages for everyone, Da Silva said.
“While there was a temporary lull in membership fee payments due to the ECQ, the situation is slowly easing up under a general community quarantine (GCQ) and hopefully will continue for the better especially across digital platforms. However, another issue is sustained new and renewal business in the HMO industry considering that current and potential corporate clients are saddled with spiraling operating costs and budget constraints which may lead to closing shop for a few. And this may have a telling effect on the HMOs,” he said.
“And while most HMOs have had to deal with COVID-19 patients’ cost for which were almost always maxed out to the HMO planholder’s maximum benefit limit, there was a temporary lull in outpatient availments for which the industry is seeing a slow return to normal with elective surgeries and the like now being arranged in most facilities. Of late and due to the current pandemic, almost all medical facilities in the country, medical specialists included, have raised their fees some of which are exceptionally high — for a host of reasons all anchored on COVID-19, a situation we continue to grapple with the best way possible and through negotiations,” he added.
As such, Da Silva said “under a COVID-19 environment which is expected to persist perhaps until the end of the year or beyond, 2020 is undoubtedly going to be a very difficult year for most businesses, the HMO industry included.”
Last week, the Insurance Commission reported that the HMO industry’s net income dipped by nearly a fourth to P1.26 billion last year, which the regulator attributed to an increase in healthcare benefits and claims paid by HMOs to a growing number of enrollees.
Around seven million Filipinos currently have HMO coverage.
“While there could be many other reasons for this decline (in industrywide profit), admittedly rising medical costs in the country could certainly be one of the more significant factors involved,” Da Silva explained.
Despite these challenges, Da Silva said the HMO industry in general, and AHMOPI in particular, remained “confident that there will still be a respectable growth in membership revenues in 2020, a closely similar medical expense figure as that of 2019, and an uptick in net income after tax.”
AHMOPI counts more than 1,700 institutional healthcare providers and 40,000 accredited medical specialists nationwide among its members.
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