HMOs Racked Up NIS 1.26b Deficit in 2011

Shortfall will shrink once the state finalizes financial agreement, however.

The financial health of the country's four health maintenance organizations, the kupot holim as they are known in Hebrew, deteriorated last year, a Health Ministry report summarizing the year shows. The data does not include a portion of the regular government subsidies for the year that have not yet been transferred by the state, but even if they had been, the HMOs would have remained with a collective deficit for the year of over NIS 400 million.

The four, Clalit, Maccabi, Meuhedet and Leumit, ended the year 2011 with a collective deficit of NIS 1.26 billion. This compares to a 2010 deficit of NIS 194 million. The main reason for the ballooning deficit last year was the absence of final approval on a financial stabilization agreement that would provide hundreds of millions of shekels in state funds for the years 2011 through 2013. It includes about NIS 800 million to be attributed to 2011, the year of the report.

The stabilization agreement is being held up due to the HMOs contention that the compensation formulas through which the state provides funding to them has been eroded substantially.

The HMOs view the deficit figures in the ministry report as proof that despite major efforts at cost cutting, the state's funding formulas are distorted and government support has been insufficient. Clalit said 2012's figures will show the gravity of the situation and called on the state to finalize the stabilization agreement for the period 2011-2013.

On the brighter side, even without the injection of state funding for 2011, Clalit Health Services, by far the largest of the HMOs, had the smallest relative deficit. Its NIS 510 million deficit was 2% of its revenues.

According to the report, absent the state's economic stabilization funding, the country's third largest HMO, Meuhedet, ran the largest relative deficit, NIS 277 million, representing 7% of its revenues. The smallest of the HMOs, Leumit, ran a NIS 150 million deficit, or 5% of its revenues. Maccabi, the second largest of the kupot, had a NIS 332 million shortfall in spending, 4.1% of revenues. The budgets of the four HMOs rose by a collective 7.7% in 2011 to NIS 32.7 billion, most of which is state funded.

Another positive aspect in the report was the decline noted in the co-payments paid the HMOs by the public. The trend continued this year, when the co-payments declined to a rate of 7% of the HMOs revenue compared to 8.8% in 2007. The decline is the result of Health Ministry efforts to curb the amounts charged the public.