Fallon Health reports $20M annual loss

Courtesy Fallon, which is based on Chestnut Street in Worcester, reported a 2016 net loss of $20 million.

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By Grant Welker

Worcester health insurance company Fallon Health reported a net loss of $20 million last year on $1.2 billion in revenue, recording its second consecutive annual loss, it reported Wednesday.

Fallon's 2016 performance roughly tripled its loss from the previous year. Revenue stayed flat from 2015 to '16, while membership rose slightly, by about 2 percent.

“Our results continue to reflect higher-than-expected claim activity within several of our product lines,” Scott Walker, the executive vice president and chief financial officer at Fallon, said in a statement with the earnings report. “We are responding to this trend with programs that focus on appropriate utilization and improvements in the coordination of care. We are also working to aggressively manage administrative expenses.”

Richard Burke, Fallon's president and chief executive officer, said the company is expanding partnerships with health plan providers in an effort to improve quality and control costs.

In January, it was disclosed that Fallon was selling Home Staff, a home care agency it owned with VNA Care Network. The price was not disclosed, although Home Staff generates about $10.5 million in annualized revenue and serves 3,500 clients, according to Amedisys, the Louisiana company that bought the agency.

Meanwhile, Wellesley-based insurer Harvard Pilgrim Health Care, which has an office in Worcester, reported $48.5 million net loss on revenue of $3.1 billion in 2016 on Wednesday. That's up from the company's 2015 loss of $39.7 million on revenue of $698 million. In a statement, Harvard Pilgrim attributed 2016 losses to "sharply increasing medical utilization, higher pharmacy costs and continuing challenges related to the ACA."