MCIC Finds Administrative Expense and Medical Expense Ratios Tango
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Manasquan, N.J. -- Managed care organizations realize managing administrative expenses is vital to operations and is crucial in the maintenance of health plans. Furthermore, optimizing costs is essential to providing the lowest costs to pass to consumers, and is key in gaining high returns for MCOs.
In an attempt to measure administrative efficiency, researchers at The Managed Care Information Center (MCIC) analyzed benchmarking data from more than 1,600 health plans nationally. The findings concluded the average MCOs administrative expense ratio declined from 15.33 percent in 1997 to 12.24 percent in 1998.
Prompting the decline in administrative expense ratios, perhaps, is the industrys renewed emphasis on spending more healthcare dollars on the act of providing healthcare. Logically, plans have put the squeeze on administrative expenses such as provider management, marketing, actuarial and membership administration.
Additionally, the MCIC researchers found the average MCOs medical expense ratio increased by nearly 2 percentage points between 1997 and 1998. Faced with rising healthcare costs, plans found themselves spending more for healthcare as the average medical expense ratio rose from 80.29 percent in 1997 to 82.07 percent in 1998.
These general findings suggest the percent of revenues retained by MCO plans was greater in 1998 than in 1997 1.31 percent higher, to be exact. Results were compiled from data published in the MCICs "National Directory of Managed Care Organizations."
For more information, contact The Managed Care Information Center, 1913 Atlantic Avenue, Dept. 14O-00, Manasquan, NJ 08736; (732) 292-1100, e-mail email@example.com, www.themcic.com.
For more information contact The Managed Care Information Center, 1913 Atlantic Avenue, Suite F4, Manasquan, NJ, 08736, toll-free telephone 1-888-THE-MCIC (1-888-843-6242), fax 1-888-FAX-MCIC (1-888-329-6242), e-mail firstname.lastname@example.org or online at http://www.themcic.com.
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