Maxicare Says Enrollments Down 50% in Year : Insurance: The firm, which sought bankruptcy protection in 1989, also says revised figures for ’88 show its loss was $611.8 million.

Maxicare Health Plans has lost half of its enrollment since filing for Chapter 11 bankruptcy protection a year ago. Enrollment declined to about 320,000 from about 650,000 enrolled last March, the company said Tuesday.

The company also revised its 1988 annual loss from the previously reported $267.8 million to $611.8 million.

The figures compare membership in the health maintenance organizations that the Los Angeles-based company decided it wanted to keep after emerging from Chapter 11 proceedings. Overall, Maxicare began last year with more than 1 million members, but it sold or closed several plans as part of its efforts to reorganize into a financially healthier company.

Maxicare spokesman Jim Lucas said the company lost about a third of its enrollment in the first three months after the Chapter 11 filing. It lost another 50,000 or so members during the open enrollment season between last September and Jan. 31, he said.

Maxicare began an aggressive advertising campaign in November designed to persuade members to stay with the plan and used the bankruptcy proceedings to force companies that wanted to drop the plan to offer it again to members.

Despite the drop in membership, Maxicare Chairman and Chief Executive Peter J. Ratican said in an interview that the company is still a relatively large one in the industry. The drop in enrollment has not been a major problem and in fact “may have improved our services,” he said, adding, “The system is working at maximum efficiency.”

The revised loss figures for 1988 were contained in a disclosure statement the company filed with the U.S. Bankruptcy Court in Santa Ana on the first anniversary of the March 16, 1989, bankruptcy filing. They were audited results, while the figures reported shortly after the bankruptcy filing last year were unaudited, the company said.

In the first nine months of 1989, unaudited figures filed in the same disclosure statement showed a net loss of $22.3 million on revenue of $412.3 million. Revenue in 1988 was $1.6 billion (audited), Maxicare said.

Ratican said the company is optimistic despite the financial losses and drop in enrollment. “We believe that 1990 is a year when we’ll show profitable numbers,” he said. “We are moving steadily toward our goal of emerging from reorganization in 1990 as a financially strong competitor,” he added.

Most of the 1988 losses were incurred by health maintenance organizations the company either sold or closed, Maxicare said. Losses during 1989 were due primarily to the expense of the Chapter 11 reorganization and to overhead cost that the company was unable to cut as fast as the decline in revenue, Lucas said. He said the company had to keep some staff members to take care of service commitments it retained even after it closed or sold some plans.

The company in January finally reduced its corporate staff to about 640 people. The positive effect of those cuts should be reflected in 1990 results, Ratican said.

He said about $11 million of the 1989 loss was attributed to legal expenses from the Chapter 11 proceedings, and the company had some writedowns. The company, however, has a positive cash flow, Ratican said. “We have been cash flow positive since March of 1989,” he said.

The bankruptcy filing suspended Maxicare debts prior to that date, but Ratican said Maxicare has since paid current bills on time. He said health-care providers are being paid within 10 days of billing.

Maxicare in January announced a reorganization plan that would result in health-care providers owning about 40% of the reorganized company. Under the plan, formally filed with the court along with the disclosure statements, creditors overall would own about 98% of the 10 million new shares the company plans to issue when the reorganization plan is approved. Doctors, hospitals and banks would also receive cash and 10 year, 13.5% notes. Bondholders would receive cash and stock.

A hearing on the plan is scheduled for April 23. Maxicare said Tuesday that the creditors committee that initially reacted favorably to the plan has now decided to recommend its approval.