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Excellus posts $23M year-end loss as net income plummets for the second straight year

Excellus BlueCross BlueShield finished last year with a net loss of $23 million — the first time since 2008 that the region’s largest insurer closed out a year in the red.

The Rochester-based health plan attributed its losses to continued increases in medical benefits being paid out.

“As our communities emerge from the pandemic, we’re seeing significant increases in high-cost inpatient hospital utilization, outpatient surgeries on hips and knees, and new prescription medications,” Excellus President and CEO Jim Reed said in a news release.

Excellus Blue Cross Blue Shield logo

This marked the second straight year of significant declines in the company’s net income. Company profits dropped 50% in 2022, from $117.6 million down to $58.9 million.

Excellus last failed to post a profit in 2008, when it ended the year with a net loss of $54 million.

The company’s $6.6 billion in premiums collected in 2023, was unchanged from the prior year. The $6.2 billion in benefits paid surpassed the previous year’s record by more than $270 million, records show.

According to Excellus:

  • 93 cents of every premium dollar went to medical care in 2023. 
  • Of that, 69 cents went to hospitals and doctors; 14 cents paid for prescription medication and 6 cents went for ER visits, labs, ambulance and related professional services. The remaining 4 cents was listed as “other medical costs.” 

Reserves fell slightly. And taxes inched upward to $440 million, according to the nonprofit’s annual report filed Friday with the state Department of Financial Services.

“We’re a company that budgets for thin financial margins,” Reed said, “and giving ourselves such a narrow window can sometimes result in a small net loss when facing the unexpected.”

Reed's total compensation topped $3.5 million last year — most of that in bonus pay and other compensation. Overall compensation for Excellus’ 10 highest-paid executives increased by 41%.

Executive compensation is set by the company’s board of directors based on comparable market data and performance, officials said.

Asked about the bonus pay, a spokesperson said those were tied to corporate and performance goals met in the prior three years of 2020-22, and that the company continues "to maintain a strong financial position and balance sheet.”

Reed to the reins in May 2021, and had served as president and CEO-elect since July 2020. He has been with the company since 1996.

Excellus has a total membership of 1.5 million and along with its parent company, The Lifetime Healthcare Cos. employs more than 4,000 people across upstate New York.

The region's largest insurer paid out unusually high hospital and medical benefits for the second straight year.

Brian Sharp is WXXI's investigations and enterprise editor. He also reports on business and development in the area. He has been covering Rochester since 2005. His journalism career spans nearly three decades.