Given H1N1, Hospitals, Insurers Brace For Severe Flu Season : Dinah Wisenberg Brin
By: Health Insurance
Submitted: 2009-09-02 12:37:42 | Word Count: 802
The H1N1 virus, or swine flu, is likely to increase health insurers' medical costs and hospitals' patient volumes this fall and winter. The extent of those increases depends on how severe and expansive the infection is.
Hospitals and health insurers are taking steps to prepare for a more widespread wave of the H1N1 virus in the coming months. While swine flu cases have tended to be relatively mild so far this year, the virus is expected to add substantially to the vast numbers of people typically hit by seasonal flu.
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Some health insurers expect to incur higher flu-related expenses in the second half of the year and are encouraging vaccinations, hand-washing and other hygiene measures to help control the H1N1 virus's spread.
Hospitals, which are stockpiling antibiotics and other supplies, generally benefit financially from severe flu seasons; a heavy flu season in the second half could mean more ER visits and hospital admissions, and possibly higher operator earnings.
"We have been monitoring flu developments throughout the year and have already managed elevated flu-related claims during a time of year when we would normally expect minimal activity," Todd Siesky, spokesman for insurer WellPoint Inc. ( WLP), told Dow Jones Newswires recently. "We are financially and operationally prepared for flu activity to remain elevated through the rest of this year, and into the next flu season."
As of Aug. 27, the 2009 H1N1 viruses were associated with more than 8,840 hospitalizations and 556 fatalities in the U.S., as reported to the Centers for Disease Control and Prevention. Flu activity appeared to be increasing in the Southeast recently as children and college students returned to school.
President Barack Obama, speaking Tuesday at the White House, called for the public to take "commonsense" measures to contain the anticipated second wave of the virus, and said he expects a voluntary flu shot program to begin soon.
Vaccines for the H1N1 virus aren't expected until mid-October, after the school year has gone into full swing. Heath insurers Aetna Inc. (AET), Cigna Corp. (CI), UnitedHealth Group Inc. (UNH) and WellPoint have announced plans to cover, to varying degrees, H1N1 vaccines for their health plan members.
Executives at Aetna have said they calculated a severe fall flu season into financial guidance for this year, and cited the swine flu as one reason they raised their forecast this summer for 2009 medical costs as a percentage of revenue.
WellPoint also assumed in its guidance a higher-than-average flu season later this year, and has cited flu-related claims as one reason medical cost increases should reach the higher end of its forecast range.
The seasonal flu in the U.S. on average leads to 200,000 hospital admissions and 36,000 deaths every year. Swine flu numbers should be comparable, and will add to the seasonal cases, said Dr. William Fried, Aetna's medical director in charge of pandemic flu planning.
Fried said in an interview that demand for flu treatment should be higher in the third and fourth quarters, with numbers hinging on the timing and virulence of the second virus wave and the demand and availability of the vaccine.
Steve Filton, chief financial officer for hospital operator Universal Health Services Inc. (UHS), told Dow Jones Newswires this week that the company has stockpiled Tamiflu, other treatments and masks, and has contingency plans to set up outdoor tents if facilities are overrun.
"We saw in the second quarter definitely a pickup at least in certain geographic areas...South Texas was a particularly hard hit or active area for swine flu," Filton said. The cases resulted mostly in emergency room visits, but not admissions.
Pomeroy Research LLC analyst A.J. Rice said it's hard to predict the financial effect on hospitals. If the flu brings higher volumes of insured patients, it could boost earnings; on the other hand, if people are afraid to congregate in public places for fear of infection, they might delay elective operations, he said.
Rice said companies seen as benefiting from swine-flu preparations are drug and medical-supply distributors, such as Henry Schein Inc. (HSIC), which supplies physician practices, and McKesson Corp. (MCK), which the CDC tapped to distribute the H1N1 vaccine nationally.
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