Rockville Managed Care Firm Stops Bleeding, Starts Healing

By Fisher, Eric | The Washington Times (Washington, DC), September 8, 1997 | Go to article overview
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Rockville Managed Care Firm Stops Bleeding, Starts Healing


Fisher, Eric, The Washington Times (Washington, DC)


After more than a year of nursing its many internal wounds, Mid Atlantic Medical Services Inc. (MAMSI), a Rockville managed health care company, has rebounded to profitability and seen its long-dormant stock show some life.

For months, MAMSI held off potentially crippling challenges, ranging from increased competition and the loss of an essential accreditation to class-action lawsuits and securities investigations, without losing money or seeing a drop in its stock.

It all finally caught up in April 1996. The one thing investors ultimately care most about - earnings - disappeared, and so did the investors. Within 10 weeks MAMSI's stock was cut in half, from $24 a share to $12.

Another two quarters of losses last year depressed MAMSI, which has more than 1.7 million members in its health maintenance organization and preferred provider organization, even more.

But after hitting a rock-bottom level of $10.25 a share in April, MAMSI shares have risen more than 50 percent, closing at $15.63 Friday. With the stock market regaining some momentum after an August lull, analysts say MAMSI is primed to continue upward.

"The last couple of years have been very challenging for the HMO industry," said William McKeever, an analyst with Schroder & Co. in New York. "There's been overcapacitization and an overemphasis on market share. Now we're seeing the pendulum swing back toward where margins mean more than market share.

"MAMSI has shown us some improvement. The turnaround is real, but it's a slow process. Management has gotten a lot more involved in day-to-day costs, and the company has gotten stronger because of it."

MAMSI's first step in the right direction was regaining accreditation for one year from the highly respected National Committee for Quality Assurance, which sets managed care standards for HMOs and participating doctors.

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