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Highmark Inc. To Slice Into Debt : Bill Toland
Highmark Inc. processed $20 billion in Medicare claims in 2008 and intends to pay down $54 million in debt principal in 2009, according to an annual financial report released yesterday by the nonprofit insurer.
The report, which includes an independent audit compiled by PricewaterhouseCoopers, is a more detailed version of the preliminary report issued earlier this month, which showed that Highmark's annual revenues had grown to $13 billion in 2008, while its investment income and net income had both dropped.
The annual report offers a look into Highmark's finances, tax liabilities, debts and borrowing.
The region's dominant health insurer is not a public company and does not issue quarterly earnings reports.
"Our biggest disappointment [last year] was that our proposed consolidation with Independence Blue Cross did not come to fruition," said Highmark CEO Dr. Kenneth Melani in a letter that prefaced the annual report.
"However, the planning process we went through has given us many positive takeaways -- including new insights into our business that will help create additional" efficiencies.
The ...
... coming year will bring a new set of challenges, particularly in the realm of health care reform, wrote J. Robert Baum, chairman of Highmark's board: "We cannot predict with any certainty the scope or direction of national health care reform, but Highmark's mission [is] aligned with the interests of the public and the Obama administration."
In the "contingencies" section of the annual report, PricewaterhouseCoopers noted that Highmark was a defendant in a class-action lawsuit "alleging violation of the Pennsylvania Nonprofit Corporation Law" because Highmark maintains, according to the suit, an "excessive" surplus. Though Highmark thinks its position is defensible, "an unfavorable outcome in this matter could have a material adverse impact on the financial position of the corporation."
The annual report also noted that the petitioners behind a long-running lawsuit against the company -- one that sought to undo the 1996 merger of Pennsylvania Blue Shield and Blue Cross of Western Pennsylvania, which created Highmark -- were denied their petition for a state Supreme Court appeal in January of this year.
Highmark also reduced its commitments to the Highmark Foundation (a related, but separate, philanthropic foundation) from 2007 to 2008. As of Dec. 31, 2007, Highmark's commitments to the foundation stood at $55.1 million; as of Dec. 31, 2008, the company's commitment to the foundation was $37.6 million.
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