The Insurance Commission (IC) of the Philippines has ordered Medocare Health Systems Inc (MHSI) to immediately stop all new health maintenance organization (HMO) business activities, following findings of ongoing non-compliance with regulatory product approval requirements.
The directive, effective June 18, also places MHSI under conservatorship as stipulated by local regulations.
Atty. John A. Apatan, who leads the conservatorship, receivership, and liquidation (CRL) division at the IC, has been appointed as the interim ex-officio conservator for MHSI.
All policyholders, creditors, and other stakeholders are instructed to direct their claims and inquiries to the CRL division or to MHSI’s registered office in Quezon City.
The IC has also advised stakeholders to monitor its official website for further updates and announcements regarding the company’s status.
This regulatory action coincides with the release of new financial data showing a marked increase in profitability for the Philippine HMO sector in the first quarter of 2025 (Q1 2025).
According to the IC, the industry’s net income reached PHP579.39 million, a substantial increase from PHP6.78 million recorded in the same period last year.
The growth in net income has been attributed to a 26.15% rise in membership fee collections, which now make up nearly all of the sector’s total revenue.
Insurance Commissioner Reynaldo Regalado noted that a government program providing public employees with a PHP7,000 medical allowance has contributed to the higher uptake of HMO coverage.
Despite the increase in net income, the sector’s total expenses also grew, rising 20.02% year-on-year to PHP22.41 billion.
The majority of these outlays were for healthcare benefits and claims, which increased by 17.41% and now account for nearly four-fifths of total expenditures.
The IC’s analysis, based on unaudited submissions from 28 HMOs, indicated that both operational and capital figures have expanded compared to the previous year, when 24 organizations provided data.
The total asset base of the HMO industry rose by 22.67% to PHP87.48 billion. This increase was driven by higher receivables from membership fees, growth in financial assets held to maturity, and increased bank deposits.
Notably, cash on hand and deposits with healthcare providers saw significant percentage gains.
Invested assets, which comprise about 20% of the sector’s total assets, grew by over 11% to PHP18.37 billion.
The sector also reported a substantial increase in loans receivables and additional investments in government securities and related entities.
Industry liabilities expanded by 22.82% to PHP75.52 billion, led by a 78.73% jump in membership fee reserves, which are critical for meeting future benefit obligations.
Total equity also increased by 21.77%, ending the quarter at PHP11.96 billion, with retained earnings more than doubling year-on-year.
The regulatory and financial developments come amid rising healthcare costs in the Philippines.
Research from WTW forecasts an 18.3% increase in medical expenses for 2025, among the highest in Asia-Pacific.
The increase is attributed to greater utilization of services, higher provider charges, and a growing prevalence of chronic diseases.
