Health Care
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Can managed care finally make some decent money in 1999? After a three-year profit drought, indications are promising. Most health-maintenance organizations are holding the line on medical costs. They've pulled out of Medicare in weaker markets. And they're winning more than nominal commercial premium increases--almost unthinkable in recent years.
Operating margins remain thin, typically 4% or less, and HMO stock multiples won't nearly approach their levels of 1995. Still, Wall Street expects net profit increases of 15% to 20% this year from all the giants--Aetna, Humana, Pacificare Health Systems, Wellpoint Health Networks, and United HealthCare.