EAGAN, Minn., April 1, 2011 /PRNewswire-USNewswire/ -- Blue Cross and Blue Shield of Minnesota and its family of companies (Blue Cross) today announced audited financial results for 2010. The nonprofit health company reported full-year 2010 revenues of $9 billion and an operating margin of 1.4%, which resulted in a net operating income of $127 million. This marks the second consecutive year of positive operating results, following three consecutive years of operating losses from 2006 to 2008. Overall net income (operating income plus other income, including investment income) in 2010 was $271 million, reflecting the ongoing recovery of financial markets, lower medical trend, and increased operational efficiencies.
Blue Cross paid out more than $8 billion in claims on behalf of its members last year, which translates to 89.3 cents of every premium dollar collected going to health care costs. Administrative expenses represented 7.4% of premiums. Additionally, Blue Cross paid more than $127 million in taxes, assessments and surcharges. Enrollment was flat at just under 2.7 million members.
"These results are in line with what we targeted for the close of 2010," said Patrick Geraghty, president and CEO of Blue Cross. "We are pleased to report that A.M. Best has upgraded our financial strength rating from B++ (Good) to A- (Excellent) as a result of this outcome. As a nonprofit organization, Blue Cross needs to be financially stable and solvent, and our financial performance for the year allows us to continue providing good coverage and services to our members, and continued investment in our community."
"Blue Cross was able to achieve a modest operating return in 2010, which builds on the financial recovery we started in 2009," said Pamela Sedmak, chief financial, strategy and innovation officer for Blue Cross. "Given the cyclical nature of our industry, we have some years in which we generate modest margins, and other years in which we experience losses. For example, we had cumulative operating losses of more than $156 million from 2006 through 2008. We began the turnaround of our operating performance in 2009 and continued our progress in 2010. Blue Cross has worked hard to recover significant losses and operate in the black. Reaching our goal of having consecutive years of positive operating performance allows us to invest in our future and long-term planning."
In 2009, Blue Cross reported an operating income ratio of 0.57%, resulting in the first positive operating performance for the organization since 2005. Over the past five year period (2006-2010), Blue Cross reported an average operating income ratio of 0.05% and an average net income ratio of 0.97%.
HMO results included in audited financials
The audited results for Blue Cross include 2010 results for Blue Plus – the company's health maintenance organization and a subsidiary of Blue Cross and Blue Shield of Minnesota. Of note, Blue Plus has reported operating losses on state programs (GAMC, PMAP and MNCare) in three of the past five years, resulting in a cumulative operating loss of -$21.7 million and an average negative operating margin of -0.9% on these programs for 2006 to 2010.
Blue Cross provides all information, reports and audited details as required by the State for both commercial and public program products. In addition, Blue Cross' financial statements are audited by the State on a tri-annual basis. Detailed financial statements for the organization's regulated businesses are filed with the Minnesota Department of Commerce. A consolidated earnings statement for 2010 results is available at bluecrossmn.com.
Blue Cross' 2010 report to the community also includes information on several community health initiatives including:
- Awarding grants to community organizations that engage health, early childhood development, housing and environmental organizations together to promote child health – and reducing health inequities by addressing mental health and social adjustments of immigrants and refugees.
- Driving Prevention Minnesota(SM) initiatives – including the do.® Campaign – to tackle heart disease, cancer, tobacco use and obesity across Minnesota. These programs are funded with money from Blue Cross' successful lawsuit against tobacco companies.
- Collaborating with health care providers – including Allina Hospitals & Clinics, Essentia Health, Fairview Health Services, HealthEast Care System and Park Nicollet Health Services – to lead the nation in adopting innovative payment models that align mutual goals of delivering high-quality outcomes and cost-effective treatment to the benefit of customers and members.
- Partnering with U.S. Bank to lead the Twin Cities Start! Heart Walk, which raised over $1.5 million for the work of the American Heart Association to continue goals of improving cardiovascular health and combating obesity. Also partnered on the CEOs Against Cancer Campaign while being named a Gold Standard Company with the American Cancer Society.
- Building on being named one of Minnesota's first recipients of the prestigious Jefferson Awards for Public Service by teaming up with Jefferson Awards and the Close Up Foundation to create a unique civic education and volunteer program that gives students at three Minnesota high schools the opportunity to design and implement action plans to make their communities healthier.
- Collaborating with Nice Ride, Transit for Livable Communities, and Mayor R.T. Rybak to bring healthy transportation in the form of a bicycle-sharing program to Minneapolis in 2010. With the help of Mayor Chris Coleman, the program is expanding to St. Paul in 2011.
- Donating 97 tons of food to the Minnesota FoodShare drive as part of our broader efforts with Second Harvest Heartland to eliminate hunger in Minnesota.
- Sustaining the Heart of Blue volunteerism program where employees annually contribute approximately 18,000 hours of volunteer paid-time-off to community services.
Blue Cross and Blue Shield of Minnesota, with headquarters in the St. Paul suburb of Eagan, was chartered in 1933 as Minnesota's first health plan and continues to carry out its charter mission today as a health company: to promote a wider, more economical and timely availability of health services for the people of Minnesota. Blue Cross is a not-for-profit, taxable organization. Blue Cross and Blue Shield of Minnesota is an independent licensee of the Blue Cross and Blue Shield Association, headquartered in Chicago. Go to bluecrossmn.com to learn more about Blue Cross and Blue Shield of Minnesota.
SOURCE Blue Cross and Blue Shield of Minnesota