The Palm Beach Post from West Palm Beach, Florida • Page 78

SUNDAY, OCTOBER 8, 1995 The Palm Beach Post SECTION A INSIDE Complete mutual fund listings, 3-6E CODING ft QNOA U.S. Diagnostic Labs hopes medical testing is just what the doctors ordered. -J 4 Jf your HMO has healthy profits, it may be hurting you Figures show spending on patients vs. profits Premium Results By PHIL GALEWIT2 Palm Beach Post Staff Writer Do you think your HMO is spending too much on executive salaries and too little on taking care of you? You're not alone. HMO The percent of a health plan's premiums spent on health care called the medical loss ratio is something few subscribers or health care purchasers consider when selecting an HMO.

Yet, the medical loss ratio is a key indicator that Wall Street analysts use to measure an HMO's fiscal health. For example, when HMO giant U.S. Healthcare in the spring of 1994 announced its medical loss ratio would be a dime higher than expected, its stock nosedived. For-profit HMOs, which dominate the Florida health insurance industry, appear healthier when they have a lower medical loss ratio than their competitors. That's because, in theory, the plan is operating more efficiently in treating subscribers and will have enough money left over after paying medical expenses to put toward improving earnings.

But while a low medical loss ratio is good news for HMO owners and shareholders, it may raise a warning flag if you are a member of that health plan. "I would rather see my premium dollars paying for my health care rather than paying for an administrator of my plan to drive around in a leased Cadillac," said Charles Inlander, president of the People's Medical Society, a national consumer health group based in Allentown, Pa. "The public should stay away from HMOs with high administrative costs and profits." Medicare spends 98 cents of every premium dollar on health services. HMOs should be held to that benchmark, Inlander said. HMOs, though, don't come anywhere close.

HMOs say their medical loss ratios are lower than the federal insurance program because they spend more Please see HM0s3E PERCENTAGES OF each premium dollar the largest HMOs in South Florida and the Treasure Coast spent on health care in 1994, according to Florida Insurance Department: CIGNA Health Plan of Florida 93.4 Physician Corporation of America 91.5 Prudential Health Care Plan 90.8 Aetna Health Plan of Florida 85.9 Humana Medical Plan 84.7 CAC Ramsey Health Plans 80.0 Health Options 79.0 AV-Med Health Plan 77.4 CareFlorida 77.4 Metlife Healthcare Network 73.7 HIP Health Plan of Florida 73.2 Pacificare of Florida 73.1 The largest HMOs doing business in South Florida and the Treasure Coast in 1994 spent between 70 cents and 90 cents of every premium dollar on health expenses, according to financial records filed with the State Insurance Department. The health plans spent the balance of their revenues on administrative costs and profits (or reserves for non-profit HMOs). Miam's Physician Corporation of America spent more than any other Florida HMO on health services, about 92 cents of every premium dollar. CIGNA Healthplan of Florida spent about 93 cents on services, but most of the plan's revenues came from fee-for-service patients, not HMO patients. In contrast, Pacificare of Florida spent the least 73 cents of every premium dollar.

Members of Congress, state legislators and consumer health groups have all accused health maintenance organizations of skimping on health care in an effort to build profits. But how much does your HMO take from your premium dollar and spend on hospital and medical expenses? The concurrency verdict should be based on evidence CO mmmm While the rest of America was getting ready for the O.J. Simpson verdict Tuesday, Jody Glea-son and Karen Marcus were holding court at a business luncheon in West Palm Beach. They represent a controversial idea that's on trial in the local business community and were on hand to dispel any reasonable doubts about it. I Gleason chairs the school board.

Marcus is a county commissioner. They co-chair a task force seeking ways to make schools less crowded. "5 Their idea, called concurrency, aims to ensure enough schools get built to accommodate families moving into Palm Beach County. And it has raised fears of a freeze on development if schools can't be built fast enough to keep pace with population growth. In the shadow of the clock ticking down to the O.J.

verdict, Gleason Marcus pleaded their case to the Business Alliance, a group of top officers and News anchor Melannie O'Connor tapes a show in the brand-new studio at WPBF-Channel 25 in Palm Beach Gardens. New owner 'Bud' Paxson has been tinkering with the fourth-place station's look, investing $4.2 million so far. Robert Douglas BUSINESS EDITOR on Paxson puts II I Florida's largest broadcaster builds the Infomall TV Network from his new West Palm Beach headquarters. By MITCH McKENNEY Palm Beach Post Staff Writer irst Lowell "Bud" Paxson paid $12 million to move himself and his wife, Maria, from the Gulf Coast into a Palm radio networks, a lot of them sports-related, most from a merger with American Network Group of Nashville last year. But right now he's busy tinkering with the look of Channel 25, the ABC affiliate whose newscasts have trailed the NBC and CBS affiliates since taking the air in 1989.

He bought it from Phipps-Potamkin last year for $32 million. Paxson has invested $4.2 million in the station much of it to build a new set at the Palm Beach Gardens studios, general manager Doug Barker said. Paxson interrupts an interview to call Barker and ask, on the speakerphone, why the set doesn't seem bright enough. "Are you going to do something about the lighting?" "It's not the lighting," Barker said. "It's the shadowing from the cameras." Barker explained that staffers already had a meeting about it and promised improvements by that evening's broadcasts.

That's the danger of being at the station in the boss' new hometown, Paxson said. He thinks of it as consulting, rather than micro-managing. The president of his TV division, Dean Goodman, says with $35,000 spent on research and a three-year plan to turn the Please see PAXS0N2E Beach mansion, the onetime estate of dime store heir Woolworth Donahue, in December. The headquarters of his Paxson Communications Corp. bronze lion in the lobby and all followed in July, uprooting from Clearwater to a building facing Clear Lake in West Palm Beach.

Now Paxson, Florida's largest broadcaster and co-founder of the Home Shopping Network in 1983, suggests he plans to buy another business to relocate to Palm Beach County, where he already owns WPBF-Channel 25 and operates WTVX-Channel 34. Paxson, 60, owns 11 other UHF stations, including WCTD-Channel 35 in Miami, and has affiliations with 10 others for an infomer-cial TV network. He also has 20 radio stations, 18 of them in Florida including WZTA, WLVE, WINZ and WFTL in South Florida. He also has eight mbhbbm staff from the Economic Council and 14 chambers of commerce. Without concurrency, there will always be a shortage of schools, said Gleason.

What's being contemplated is much like the rules we already have to make sure there are enough roads to support growth, said Marcus. By 1:08, the luncheon was over and most attendees had left to watch the jury in Judge Ito's court pronounce O.J. not guilty. But in the court of local business opinion, the jury was still out on school concurrency. "It may be reasonable, I don't know," said Business Alliance Chairman Walter Chinn.

It's difficult to reach a verdict until all the facts are in, others agreed. And all the facts are far from in. The task force of school board and county commission appointees has until next June to recommend a plan that could require voter approval. And it will be at least three months before there's even a draft with details enough to command a reasoned response. In the meantime, and in the spirit of the O.J.

phenomenon, concurrency is being tried on a more visceral level: Forget the details; how do you feel about it? And that poses the risk of polarizing people whose diverse agendas converge at the point of wanting to help improve schools. Simple concept; simplistic solutions? The basis for concurrency is simple: It's nuts to build new communities that attract families if we don't have room in our schools for their kids. And no one can object to this concept. But there are legitimate worries that introducing concurrency in a simplistic way could create more problems than it solves. Current thinking favors a two-part approach: Convince voters to approve a sales-tax increase to pay for schools we already need; and Get voters to cede some municipal power to the county so it can cut a deal with the school board that sets countywide rules to ensure future development doesn't outpace school capacity.

"It's not as difficult as people think," Marcus told the Business Alliance. But a study that plays to business skeptics suggests it was too difficult for state officials when they imposed concurrency requirements for roads and other public services 10 years ago. And nothing much has changed. Schools and local governments still play by different rules and are driven by different agendas. Consequently, "there are substantial legal, institutional and practical barriers to the adoption and effective implementation of a legally defensible school concurrency requirement which is linked to the issuance of development permits." Or at least, so says the study by Tom Pelham, who once enforced concurrency rules as Secretary for the Department of Community Affairs.

Who will make decisions that involve both schools and development? How will those decisions be paid for? And who will developers sue when they don't get their way? For business people to reserve judgment on concurrency until they get answers to questions such as these is not unreasonable. And, in fact, they should be encouraged to raise them. Unlike O.J.'s, the verdict on concurrency should be one the entire community can support. And that requires that all the facts be entered into and everyone get a fair hearing. Photos by BRIAN POBUDAStaff Photographer Paxson looks at IN TV his Infomall Network of infomercials as a money tree: 'Somehow we drifted into this Latin thing, programus interruptus, and it UTC's rising stock shows turnaround that's working upward trend in aerospace stocks.

But with its stock climbing 30 points to more than $85 in less than a year, analysts are saying that UTC's turnaround is no fluke. Last year, income swelled to almost $600 million and earnings reached $4.40 per share all on net sales that were lower than in 1991. Today, UTC stock is rated a "strong buy" on Wall Street. Analysts project its price to rise higher than $100 a share, its earnings to more than $5.50. "Absent a market reversal, if the numbers continue to be in line with (expectations on) the Street, the stock could have something more in it not just for the quarter but for the year," said analyst David Leibowitz of Burn-ham Securities.

The return trip to profitability start- By STEPHEN POUNDS Palm Beach Post Staff Writer After a painful crash diet, United Technologies Corp. is strutting down Wall Street again as a svelte, globetrotting wonderboy. Oh how things change. Three years ago, the Hartford-based engine-, elevator- and air-conditioner maker lost $1 billion. Earnings plopped to minus $8.91 a share.

Stock stumbled to the $40s after hitting a high of $62. The company was left reeling from severe Pentagon cuts and a depressed airline industry while it coped with an untimely recession. Investors grumbled that UTC was bloated from years of Reagan-era defense dollars and airline deregulation, too fat for its own good. Then, the turnaround. The company has benefited from a drop in value of the do'lar and an overall THE ASSOCIATED PRESSFILE PHOTO Pratt Whitney with operations in Palm Beach County boosts United urinologies' bottom line with its engines for Boeing's new J77 jet.

Please see UTC2E.