A remarkable growth

In the past several years, health maintenance organizations (HMOs), which hit the Philippine health care scene in the 1980s, have been growing remarkably on the back of the country’s robust economy, which benefits the private corporations that form the massive bulk of HMOs’ client base.

In 2017, according to the Insurance Commission (IC), HMOs collectively earned P36.8 billion in revenue, up 11.5% from P33 billion in 2016. Their net income also rose, by 40.44% from P667.5 million to P937.5 million. As of September 2018, the revenues of the country’s HMOs reached P32.2 billion and their net income P1.8 billion.

IC has been supervising HMOs since 2015, a responsibility that the Department of Health (DoH) used to have. One key step the agency took to improve industry standards was to increase the minimum paid-up capital requirements for HMOs. A 2016 circular from the IC said that all existing HMOs should have a minimum paid-up capital of P10 million, while for new HMOs, the required amount is P100 million. DoH previously set the requirement at P10,000 only.

“We welcome the move of the government to put the HMOs under the IC to regulate the industry and protect the public interest,” Jeremy G. Matti, president of Asalus Corp., which operates under the brand name Intellicare, said.

The change also helps combat predatory pricing. In the past, Mr. Matti said, multiple HMOs were forced to shut down because of wrong pricing.

“By definition, it is true that we are a health care service provider, but we are also a risk carrier. We take on risk. Being under the IC, all pricing has to be actuarially sound. So predatory pricing will be at its minimum level eventually, because of reportorial requirements submitted to the IC. More or less they can check the viability of an HMO. Is it still strong financially? Is it capable of servicing a million members? All these will be for the benefit of the public,” he said.

For his part, Franz Joie D. Araque, senior vice-president and head of the health care division of Cocolife, a Filipino-owned insurance company with health insurance business, said, “The shift of the supervision of the HMOs from the DoH to the Insurance Commission is an index that the government is serious about supporting the industry.”

He added: “Our thrust is always to ensure ultimate protection of our consumers. To put everybody on a level-playing field ensures guaranteed protection of our consumers. Unfortunately, there’s a lot of disparity among players in the industry. There are small-scale HMO players that attempt to take on so much risk and of course that jeopardizes the interest of our consumers.”

Improving services through technology

HMOs in the country are harnessing the power of technology to provide better services to its members, as well as to improve their working relationship with their accredited medical institutions and professionals.

Cocolife is taking initiatives to electronically link with its partner hospitals to facilitate faster and more efficient exchange and processing of information, according to Mr. Araque. Their company is also in the process of upgrading its information technology system to adapt to the demands of the digital age.

Medicard Philippines, Inc., meanwhile, uses a suite of business intelligence software by SAS for things like utilization and pricing analyses, said its president, Dr. Nicky S. Montoya.

The firm collaborates with a local bank to produce custom bank statements for its partner doctors. It has also been using electronic fund transfer to quickly compensate their doctors for their services.

“I think our partner doctors appreciate this ease and clarity of information. It’s faster for them to get their payments and easier for them to do accounting,” Dr. Montoya said.

Intellicare has formed a partnership with Medgate, a provider of telemedicine in the country. Telemedicine allows Intellicare members to consult with physicians remotely using their phones. (There’s a Medgate telemedicine app available for download as well.)

Mr. Matti also revealed that they will soon be launching a product sometime this year with Fullerton Healthcare Corp. Ltd., a Singapore-based vertically integrated health care platform that acquired a 60% stake in Intellicare last year. This product will enable Intellicare members to avail themselves of services not only in the Philippines, but in other countries where Fullerton Health operates, including Singapore, without using cash.

Looking ahead

In the coming years, Mr. Matti believes that the demand for the products and services that HMOs provide will continue to grow. “But we also foresee that because of economics and behavioral changes, there will be new products that will address the needs of the public,” he said.

Meanwhile, Cocolife is looking to extend its services to more people. Mr. Araque noted that today, there is still only a handful of private citizens buying health insurance plans and HMOs. It is usually the private companies that purchase these plans to attract talent or incentivize them to stay.

“What we intend to do is to come up with plans and programs that will encourage more Filipinos to have access to medical care,” he said.

When it comes to Universal Health Care Act that President Rodrigo R. Duterte signed in February of this year, HMOs are in a wait-and-see mode.

The law provides that every Filipino citizen should be enrolled in the National Health Insurance Program and that he or she should be granted immediate eligibility and access to preventive, promotive, curative, rehabilitative and palliative care for a bevy of health services.

It also says that to ensure predictability of health expenditures, individual-based health services should be financed primarily through prepayment mechanisms, such as social health insurance, private health insurance and HMO plans.

The DoH and other concerned government agencies were given 180 days to craft implementing rules and regulations (IRRs) in connection with the law. It was reported in various news outfits last month that IRRs would be released by June or July.

“It’s a wait-and-see thing for our industry now. We’re not yet sure how the final implementation of the law [Universal Health Care Act] will be,” Mr. Araque said, adding that the government’s intention to extend medical care to more people through the law is admirable.