Texas Children's records $36.2M operating loss on insurance arm

Houston-based Texas Children's Hospital saw its financial picture improve in the first six months of fiscal year 2017, despite recording an operating loss of $36.2 million on its health plan, according to bondholder documents.

Texas Children's reported operating income of $28.5 million on revenues of $1.7 billion in the first six months of fiscal year 2017. In the same period of fiscal year 2016, the hospital recorded an operating gain of $14.9 million on revenues of $1.5 billion. The hospital said its financial boost was primarily attributable to higher net patient service revenue.

Texas Children's health plan struggled in the six-month period that ended March 31. The hospital said the $36.2 million loss on Texas Children's Health Plan was attributable to the launch of the STAR Kids Program in November 2016, which added an additional 24,370 members to the health plan.

"STAR Kids serves members who are more medically complex than other Medicaid populations and who require a higher level of care," said Texas Children's in its financial disclosure. "In addition to increased medical costs, this program also requires a higher level of case management and care coordination, along with related increased information technology infrastructure."

Texas Children's is taking steps to stem health plan losses, including renegotiating future premium rates with the state. 

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