The HMOs ended fiscal year 2011 with a deficit of NIS 1,259 million – a considerable increase over the NIS 203 million deficit in 2010. The increase is explained in part by failure to receive support funding for 2011 due to delays in signing the stabilization agreements for 2011-2013. Maccabi Healthcare Services and Meuhedet Health Services ended the 2011 fiscal year with a deficit totaling NIS 332 million and NIS 277 million respectively (compared with deficits of NIS 94 and 23 million respectively in 2010). The Clalit Health services deficit for 2011 amounted to NIS 510 million (including hospital deficits), compared with a deficit of NIS 123 million in 2010. The Leumit health services deficit stood at NIS 150 million (when neutralizing a one-time payment to the medical malpractice fund of NIS 116 million). These results are reflected in the summary report on the activities of the HMOs in 2011, which was prepared by CPA Lior Barak of the HMO and complementary health services supervisory department in the Ministry of Health and CPA Daphna Barzilay of the CPA firm Barzilay and Co. The report presents the comparative results of the four HMOs for 2011.
The financial statements of the HMOs for the first half of 2012 show that the deficit pattern is continuing. Based on these reports and on the HMO forecasts, 2012 is expected to end with a substantial deficit.   The financial state of the HMOs Analysis of the consolidated financial reports of the HMOs indicates that three of the HMOs have a net asset deficit: Maccabi – NIS 82 million, Meuhedet – NIS 84 million, and Leumit – NIS 1.05 billion. For Clalit, the asset values are positive – NIS 1.24 billion. The cash flows in all of the HMOs for 2011 were positive and totaled NIS 53 million, where the deficit was underwritten by an increase in commitments.
The cash value of the HMOs for December 31, 2011 totaled NIS 2.8 billion, the main share being that of Clalit. The cash reserves amount to average activity days of 38 in Clalit, 14 in Maccabi, 5 in Meuhedet and 3 in Leumit. The operating capital of the HMOs is negative and totaled about NIS 6.5 billion.
Expenses
The increase in the hospitalization expenses (about 9%), payroll (about 7%), in the expenditure on medicine and medical equipment purchases (about 8%) and in the costs of buying the services of private clinics and laboratories in 2011 compared with 2010, caused an increase of about 8.4% in the community segment of all of the HMOs and of about 8% in the expenditure on all of the segments in all of the HMOs (an adjusted change rate of about 3.5%). The expenses due to the purchase of hospitalization services formed about 41.7% of the total 2011 expenditure of the community segment in all of the HMOs, compared with about 41.5% in 2010. The payroll expenses formed about 26% of the total expenditure of the community segment in all of the HMOs, compared with about 26.4% in 2010. The expenses due to the purchase of drugs and medical equipment remained unchanged and stood at about 20.9% of the total expenditure of the community segment in all of the HMOs.
The rate of change in the operational expenditure (excluding financing) per capita, standardized for the community segment in 2011 compared with 2010, after adjustment, totaled about 4.7%.   Revenues
About 87.5% of the community segment of all of the HMOs and about 78.5% of the revenues of all of the segments if the HMOs originate in statutorically mandated government sources. These revenues include revenues from the health services basket, under the national health insurance law, 1994, and revenues from financial aid, which the government disburses to the HMOs in accordance with the budget fundamentals law, 1985.
The remainder of the HMOs’ revenues comes mainly from their members.
The total revenues from the government increased in 2011 by about 5% over 2010. The revenues from members in the community segment diminished by about 0.5%, and in all of the segments they increased by about 5.5%.
The total HMO revenues from all of the segments increased in 2011 by about 5.2% over 2010.   Health Basket
The cost of the medical services basket for 2011 totaled about NIS 32,669 million – a 7.7% increase over the cost of the basket in 2010, which totaled NIS 30,333 million.
The funding of the medical services basket is comprised of the following components:

  1. Capitation – the bulk of the funding sources (some 89%) according to the national health insurance law 1994 (“the law” hereinafter), is divided between the HMOs by the National Insurance Institution, relative to the weighted membership share of each of the HMOs. The weighted number of members is calculated according to a formula, which was defined in the national health regulations (allocation to HMOs), 1995, and it weights the number of HMO members according to their age, gender and place of residence. In November 2010 the capitation formula was updated and indices were added, taking into account gender, use of medications and distance between place of residence from population centers.
  2. Severe diseases – in the national health regulations (deduction of severe disease cost), 1995 – five severe diseases were defined: AIDS, renal insufficiency, gaucher’s disease, hemophilia and thalassemia). The HMO receive separate budgeting for their members who suffer from these diseases, according to a tariff which was set for each of the diseases. On July 1, 2010 the severe diseases tariffs were updated in the regulations.
  3. Self-generated revenues go toward payment for 6.45% of the cost of the health basket directly from HMO revenues from their own sources.
    Following the higher standardized population count in 2011 over 2010 in Maccabi relative to the other three HMOs, the Maccabi revenues under the national health insurance law, grew at a 9% higher rate over 2010, compared with a growth of 7.5% in Clalit, 7% in Leumit and 6.9% in Meuhedet.

Revenues from members
HMO revenues from their members consist of member copays for medicines and medical equipment, member copays for medical services (doctor visits, outpatient clinics, institutes etc.) and from complementary insurances.
Copays for medicines and medical equipment – revenues from members due to payments made for medicines and medical equipment, which in 2011 totaled about 7.4% of the total revenues of the community segment in all the HMOs, increased by 1% over 2010.
The revenues from medicines and equipment which is included in the health basket, and which make up about 5%-6% of the total revenues of the community segment in Clalit and Maccabi, and about 4% in Meuhedet, dropped relative to 2010 by about 2.8% in Clalit, and rose about 1.8% in Maccabi and about 3.2% in Meuhedet.
The share of revenues from members out of the total cost of the basket – stood in 2011 at 7%, continuing the downward trend from the record level of 8.8% in 2007.
We are hopeful that this information will be helpful to the public, the HMOs, and the decision makers in the various organizations, in better understanding this issue, as to improve the service to the public and to make informed decisions. For inquiries and clarifications, please contact the supervisory department of the HMOs in the Ministry of Health, at tel. 02-6705064.