Financial Filings Portray Ups and Downs of CCOs Early Growth

FamilyCare reported strongest profits among Oregon CCOs, while others had low cash reserves, but regulators aren’t worried

Oregon’s 16 coordinated care organizations, born out of the Affordable Care Act to provide healthcare to people on Medicaid, appear to be entering their financial adolescence: reporting stronger profits as they grow, but not yet fully mature or ready for long-term independence.

All were profitable in 2014, according to internal financial statements published Friday by the Oregon Health Authority, and several CCOs have strong cash reserves. But others reported limited cash, sometimes only enough cash to last a few days in a crisis – though Mark Fairbanks, chief financial officer at the Oregon Health Authority, says he’s not concerned.

“With all the most current disclosures, CCOs are compliant,” Fairbanks told The Lund Report. “Their financial statements are certainly sufficient and satisfactory to have them continue to perform.”

Health Share of Oregon had about three days of cash in the bank, and Columbia Pacific just about seven days. At the other extreme is FamilyCare Inc., the state’s most profitable CCO, which has 141 days of cash on hand.

The state’s first coordinated care organizations were licensed in 2012, though some companies now operating CCOs had previous experience with the Medicaid dollars that are largely funding the state’s transformation of healthcare programs for poor and low-income Oregonians. Observers should expect some financial metrics to continue to fluctuate as CCO leaders learn from experience, Fairbanks said. In addition, each CCO operates in a different region, and serves different population groups -- leading to even more variation.

Fairbanks has been in his job for just three weeks, and, while he has a professional background working for hospitals, insurance companies and physician groups, he’s still learning the ropes. He hopes to use these financial reports alongside other reports the CCOs have submitted to gain a greater understanding of Oregon’s health transformation’s efforts.

“When you correlate this to incentive and performance metrics, you’re able to learn more about the attributes and factors that are impacting individual CCOs. I look forward to going and meeting CCOs soon on a one-on-one basis, so I can better understand and see different areas and meet difference folks,” he said.

Click here for a spreadsheet that highlights key financial metrics for the state’s CCOs. Here’s an up-close look at the insights these numbers reveal:

AllCare Health Plan

With roots that go back to the 1996 creation of a for-profit physician-owned Medicaid plan, AllCare Health Plan is one of a handful of Oregon CCOs with roots predating the Affordable Care Act. Chosen as a coordinated care organization in 2012, it offers services in Jackson and Curry counties in southern Oregon.

AllCare reported $14.9 million net income in 2014, up from $4.3 million in 2013. It spent an average of $283.37 on healthcare per member each month last year, making it one of the state’s lower-spending CCOs.

Cascade Health Alliance

Cascade Health Alliance is comprised of a network of hospitals doctors and clinics. It is also a subsidiary of Cascade Comprehensive Care Inc., which also administers Atrio Medicare health plans in Klamath County.

CHA reported $616,928 net income in 2014. Its 2013 net income is unavailable, because its report to the state includes all sources of revenue, including those from Atrio, and does not break out the CCO separately. CHA spent $282.14 on healthcare per member per month last year, below the $314.80 statewide median.

Columbia Pacific CCO

Columbia Pacific CCO in Clatsop, Columbia and Tillamook counties previously offered coverage in Reedsport and portions of Coos County, but members in those communities were transferred to Trillium or Western Oregon Advanced Health last month.

Columbia Pacific CCO reported net income of $1.59 million in 2014. Its 2013 net income is unavailable, because its finances, along with those of Jackson Care Connect and PrimaryHealth Josephine County, were all consolidated together into CareOregon’s financial report that year.

Columbia Pacific CCO spent $348.60 on healthcare per member per month last year, above the statewide median.

With an operating margin of just 0.5 percent, and only enough cash on hand to run for seven days in a financial crunch, Columbia Pacific CCO has more limited financial resources than most CCOs. But its assets outweigh its liabilities, a favorable indicator. It’s worth noting that Fairbanks said he is not concerned about the financial health of any CCO in the state.

Eastern Oregon CCO

Formed in May 2012, Eastern Oregon CCO is owned half by ODS Community Health (a Moda Health Plan subsidiary) and half by Greater Oregon Behavioral Health Inc., and serves Medicaid members in 21 counties in eastern Oregon.

It reported net income of $18.5 million last year, up from $808,928 the year before. It spent $332.62 on healthcare per member per month last year, above the statewide median.

FamilyCare Inc

FamilyCare is a Portland-based nonprofit in Multnomah, Clackamas and Washington counties, as well as parts of Marion County, also administers Medicare and Medicare Part D plans. Though it did not break down its revenue sources in its 2014 report, a separate document shows that in 2013, the company received 16 percent of its revenue from Medicare and 84 percent from Oregon Health Authority Medicaid contracts.

FamilyCare reported net income of $69,895,385 last year, making it the most profitable CCO in Oregon by a wide margin. (No. 2 in the state is Trillium Community Health Plan, which reported $22.2 million net profit last year.)

As one of the largest CCOs in Oregon with more than 130,000 members, its size may have led to more efficiency and boosted the bottom line. FamilyCare spent $244.59 on healthcare per member per month last year, less than any other CCO. (Net lowest was Yamhill CCO, at $274.84 per member per month.) With assets that far exceed liabilities and enough cash on hand to cover 141 days of expenses, FamilyCare is the best prepared CCO in Oregon to withstand a prolonged cash crunch.

Health Share of Oregon CCO

Health Share of Oregon is a nonprofit founded by a consortium of healthcare organizations and service groups in the Portland metro area. It operates in Clackamas, Multnomah and Washington counties.

It reported net income of $15.1 million last year, up from $3.3 million in 2013. But despite climbing profits, Health Share had only three days of cash on hand at the end of 2014 – and that was after significantly boosting its cash holdings over the year. Health Share of Oregon spent $328.20 on healthcare per member per month last year – just slightly more than the $314.80 statewide median, but notably higher than the Portland area’s other CCO, FamilyCare, which spent $244.59.

Intercommunity Health Network CCO

Intercommunity Health Network’s roots go back to 1994, when it was founded as a subsidiary of Samaritan Health Services. Today, it operates in the Willamette Valley and along the mid-Oregon coast.

IHN CCO reported net income of $16.8 million last in 2014, up from $3.5 million the year before. It spent an average of $352 on healthcare per member each month last year, more than the $314.80 statewide average.

Jackson Care Connect

Jackson Care Connect in Jackson County reported net income of $14.1 million in 2014. Its 2013 net income is unavailable, because its finances, along with those of Columbia Pacific CCO and PrimaryHealth Josephine County, were consolidated into CareOregon’s financial report that year. CareOregon is a nonprofit that provides services to CCOs.

On average, Jackson Care spent $297 on healthcare per member per month last year, below the statewide median of $314.80.

Though it only has 10 days of cash in reserve during a crunch, Jackson Care is somewhat protected by having notably more assets than liabilities.

PacificSource CCOs

Eugene-based PacificSource operates two coordinated care organizations, one in central Oregon and one in the Columbia River Gorge area, in addition to a traditional private health plan and Medicare offerings.

Its two CCOs reported a combined net income of $25,535,981 last year. Their 2013 net income is not available, because it is not broken out in the corporation-wide financial filing PacificSource sent to state regulators.

PacificSource reported slightly different per-member, per-month health spending at its two CCOs, averaging the statewide median of $314.80 in central Oregon, and slightly less, $305.99, in the gorge.

PrimaryHealth of Josephine County

PrimaryHealth reported net income of $890,982 last year. Its 2013 net income is unavailable, because its finances, along with those of Columbia Pacific CCO and Jackson Care Connect, were all consolidated together into CareOregon’s financial report that year.

PrimaryHealth spent an average of $327.37 on healthcare per member per month last year, slightly more than the statewide median.

Trillium Community Health Plan

“Trillium is a CCO, it also has a line of business in providing insurance, so it’s also licensed by the DCBS,” Fairbanks said, referring to the Oregon Department of Consumer and Business Services, which houses the Insurance Division. Under this arrangement, Trillium files National Association of Insurance Commissioner reports with insurance and CCO regulators, rather than the financial documents submitted by the other CCOs. As a result, the financial figures available for Trillium are slightly different, and per member per month healthcare spending is not available.

Trillium is owned by Agate Resources Inc., a Eugene-based family of healthcare companies being acquired by Missouri-based Centene Corp. under a deal announced earlier this year. "We view the Oregon CCO model as consistent with our philosophy that healthcare is best delivered locally. Agate has demonstrated success working closely with providers and key community stakeholders, and we are committed to maintaining that approach in the future," Michael F. Neidorff, chairman and CEO of Centene, said in a statement when the acquisition was announced.

Trillium reported net income of $22.2 million in 2014, up from $3.9 million the year before – figures that reflect profits from all of the company’s health insurance plans, not just its CCO.

Umpqua Health Alliance

Though it does business as the Umpqua Health Alliance, this Douglas County-focused CCO is legally incorporated under the name DCIPA LLC. It’s owned by Architrave Health LLC, which in turn is owned by Mercy Medical Center and medical practitioners within the region.

Umpqua Health Alliance reported net income of $8.1 million in 2014, up from $5.8 million in 2013. It also reported significant cash reserves, enough to cover 138 days’ expenses. That makes Umpqua second only to FamilyCare on this measure of financial robustness.

Umqua spent $351.88 on healthcare per member per month, on average, last year, above the statewide median of $314.80.

Western Oregon Advanced Health

Created in 2012, services in Coos County and northern Curry County, Western Oregon Advanced Health is run by a consortium of doctors along the Oregon coast. The company also owns South Coast Technical Innovations, a grant-funded business developing electronic record systems.

WOAH reported a net income of $1.2 million in 2014, up from $651,265 the year before. It spent an average of $402.87 per member per month on healthcare, the most of any CCO in the state.

Willamette Valley Community Health LLC

Created in 2012 to serve Marion and Polk Counties, Willamette Valley Community Health was founded by healthcare organizations that invested start-up cash in exchange for partial ownership.

It reported net income of $14.5 million in 2014, up from a net incomeof $3.7 million the year before. Willamette Valley spent an average of $278 per member per month on healthcare last year, well below the $314.80 statewide median.

Yamhill CCO

Created in 2012 to serve Yamhill County, this nonprofit CCO works with Mid-Valley Behavioral Care Network for mental health services and began offering dental benefits in 2014.

It reported net income of $6.1 million last year, down from $8.3 million in 2013. Yamhill CCO spent an average of $274.84 on healthcare per member each month in 2014, far below the statewide $314.80 median.

Correction: An earlier version of this story contained incorrect net income, or profit, figures for Willamette Valley Community Health LLC. The article has been updated to reflect accurate information. The Lund Report regrets the error.

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