FHP Reports Its Net Income Jumped by 69%

Citing membership gains and rate increases, FHP International Corp. has reported net income of $9 million for the third fiscal quarter, up 69% from $5.35 million for the same quarter a year ago.

The Fountain Valley-based health maintenance organization said its revenue for the third quarter ended March 31 was $266.5 million, up 43% from $186.8 million for the same quarter in 1989.

Net income for the first nine months of fiscal 1990 was $22.3 million, a 55% increase from $14.4 million for the same period in fiscal 1989. Revenue for the most recent nine-month period rose 40% to $699 million from $499.7 million.

“FHP’s revenue grew substantially as a result of membership gains, a rate increase from the federal government for the company’s Senior Plan (which contracts with Medicare) and rate increases from employer accounts,” said Dr. Robert Gumbiner, FHP chairman and chief executive.

The company said that in the 12 months ended March 31, its membership grew 19% to 529,000 enrollees from 446,000 enrollees. In that same period, membership in the company’s employer group plans increased 15% to 372,000 members, while its Senior Plan for Medicare recipients expanded 29% to 157,000 members.

While FHP’s historic emphasis has been on owning its own hospitals and clinics and employing its own doctors, more recently it has expanded by affiliating with private physicians and contracting with outside hospitals and specialists--a strategy that has slightly increased the cost of providing patient care, Gumbiner said.

FHP in the last year has been able to increase its premium rates about 11% for commercial plans, and Medicare has boosted its reimbursement rate by 14.5%. Together these factors have covered FHP’s higher costs, said FHP President Westcott (Bill) Price.

FHP PERFORMANCE

Here are revenue and net income figures for FHP for the last nine fiscal quarters.

Revenues (in millions of dollars): $266.5. Net income (in millions of dollars): $9.0.