Swelling health plan losses batter Northwell’s earnings

Health plan losses have struck another otherwise healthy hospital system: Northwell Health.

New York City-based Northwell posted an operating loss of $36.2 million in its fiscal first quarter, owing predominantly to a $22.7 million loss by its CareConnect plan for individuals and small groups and a $3.8 million loss by its other commercial plan.

Northwell joins a litany of hospital companies that are trying to stem mounting losses at health plans that they started in recent years to try to diversify into managed care and cater to the newly insured under the Affordable Care Act and Medicaid expansions in 32 states.

Phoenix-based Banner Health and Partners HealthCare System in Boston are trying to adjust premiums and cut costs that resulted in $100 million-plus losses by their health plans last year.

Catholic Health Initiatives of Englewood, Colo., and Tenet Healthcare Corp. in Dallas have their health plans for sale after years of losses dragged down their financial performance.

Northwell is counting on a proposed premium increase and some regulatory help for its money-losing CareConnect plan, Northwell spokesman Terry Lynam said.

CareConnect’s main problem is a $124 million risk-adjustment payment that Northwell must pay the CMS this year for 2016 because its members are deemed less sick than populations served by other plans in New York, Lynam said. In the first quarter, the risk-adjustment liability was $29.4 million, a cost that dragged CareConnect into the red.