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Biotech / Medical : Oxford Health Plan (OXHP)

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To: Thomas Haegin who wrote (595)	12/17/1997 8:30:00 AM
From: Worswick	Read Replies (2) of 2068

Re "other charges" reported in Wall Street Journal. Thomas you and Mike don't seem to get it that none of these HMO's know what their cash flows really are. Did Aetna with their recent $103 million charge know what was lurking in the bushes? They might have known the problem but they didn't know the figure. These "other" charges keep croping up because this is really a situation of something called a "rolling break even". What you are both grappling with is the unknowable. What are these "other charges" in the future? No one knows. Mike look at the other HMO's in this universe. An analogy is what you should look for, a historcal precedent in this universe of companies. You have the information. Look it up. It's nice to do these spreadsheets. If it makes you feel better. But when the CEO of a company won't now, or ever in the future commit himself to a figure of future charges.... because he doesn't have the vaguest idea of what these figures really are. Scary but all these HMO companies seem to me to dwell in the land of "rolling break even". Probably, the result of the complexity of billing charges and changes, cash outflows and inflows. Maybe what we are seeing here is simply the coming of age of adequate computer systems that are still struggling. George Putnam in his "Turnaround Letter" of December recommended Oxford at $22.95. Fortune in the December 29, 1997 issue recommends Aetna (after problems similar to OXHP). IMHO your workups of the cash flows of this company are simply perfect except you can't know the charges taken or restated next quarter. Can you? Again, I ask the question is there is a recent equivalent to OXHP in this sector that you or anyone can think of? Men Mailman... you're almost up your buck thirty in two days. 15,777 days until you get to court.

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