Fallon sees financial spike, hitting $22M operating income

Photo | Grant Welker Fallon's Worcester headquarters

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By Grant Welker

The second quarter of the year, when the region was struggling to make it out of the worst of the coronavirus pandemic, was a good one financially for Worcester's Fallon Health and other major insurers in Massachusetts.

Fallon said Friday its operating income hit $22.3 million in the quarter ending June 30 on revenue of $441 million, a vast improvement over the same period a year ago, when operating income was $1.3 million on revenue of $415 million. Fallon came into 2020 with a $43-million operating loss for last year.

Fallon had a slight operating loss of $800,000 in the first quarter, with investments and other income bringing it to a bottom line of a $2.3 million net income. The company saw decreased use of services by members due to the pandemic, CFO Todd Bailey said, but expects members will seek more in-person health care in the second half of the year.

Among steps Fallon took related to the pandemic, the company relaxed prior authorization requirements in general and removed them on telehealth services. It also waived cost-sharing for medically necessary telehealth services, and covered all medically necessary coronavirus testing, treatment and counseling with no cost-sharing for members. Fallon also turned its senior care facility on Grove Street in Worcester into a temporary site dedicated exclusively to coronavirus care, and set up a dedicated hotline for members to ask questions about coronavirus and potential resources.

Membership in Fallon stands at 253,344, down slightly from the same time last year when the number stood at 265,981.

Other major Massachusetts insurers also generally reported strong quarterly financials Friday.

Blue Cross Blue Shield of Massachusetts, the state's largest by number of members, reported along with its HMO Blue plan a combined operating income of $150.1 million on revenue of $2 billion. Boston-based Blue Cross Blue Shield, which has 2.8 million members, has said it will return $101 million in premium refunds and anticipated rebates to its customers.

Harvard Pilgrim Health Care of Wellesley, with more than 1.1 million members, reported operating income of $54.5 million on revenue of $691.6 million. Harvard Pilgrim said in June it will provide $32 million in premium credits to all its fully-insured employer groups, as well as to Medicare Supplement members.

Watertown-based Tufts Health Plan reported an operating loss of $6.3 million on revenue from premiums and fees of $2.9 million. Tufts' membership is just over 1.1 million.