The continued stabilization efforts related to OmniCare-MI continue, including pursuing joint ventures and other similar activities. In June 1999, OmniCare-MI joined with Blue Cross Blue Shield of Michigan to provide health care, dental and prescription drug benefits to employees of two new Detroit casinos. There are currently approximately 5,000 CasinoCare Venture members receiving health coverage and generating medical premiums of approximately $0.8 million monthly. The casinos' present facilities may be replaced by larger facilities in Detroit as early as 2004; and based upon the casinos' estimates, the replacement facilities, when built and open, will have up to 8,000 employees (amounting to more than 18,000 members) requiring health coverage, which could generate medical premiums of up to $2.3 million monthly ($28.0 million annually). The Company receives a management fee based on the medical premiums generated from those members who select the Company's products. There can be no assurance that the CasinoCare Venture will be able to increase its covered membership as a result of the proposed larger facilities.
Marketing, general and administrative expenses increased $2.9 million (11%), to $30.2 million in the year ended June 30, 2000, from $27.3 million in the year ended June 30, 1999. The increase was due primarily to increases in wages and benefits of $1.8 million and increases in temporary labor costs of $0.9 million.
Medical services expenses for County Care in fiscal 1999 were $2.1 million from inception of the contract in April 1999. The MLR for County Care was estimated at 92%, a rate management believed adequate to establish reserves sufficient to cover anticipated program medical expenses.
Marketing, general and administrative expenses decreased $17.0 million (38%), from $44.3 million in the year ended June 30, 1998 to $27.3 million in the year ended June 30, 1999, due to the following corporate and Tennessee activities: (i) employee downsizing in fiscal 1998 and early fiscal 1999 which significantly contributed to the decrease in salary expense of $5.1 million; (ii) expensing of $1.0 million of deferred HMO licensure-related costs in Louisiana and Pennsylvania in fiscal 1998; (iii) a decrease in professional service fees of $2.0 million related primarily to the fiscal 1998 financial restructuring program; (iv) a decrease in promotion and advertising expense of $2.6 million; and (v) a decrease of approximately $6.0 million related to UltraMedix and UA-FL, which ceased operations and were placed in liquidation in March 1998.
On September 25, 2000, the Company replaced its $4.0 million bank line of credit, originally due July 1, 2000, with a $4.0 million term loan from the same bank lender. The term loan requires monthly installments of approximately $85,000, based upon a five-year amortization, through September 30, 2001 when the remaining unpaid principal of approximately $3.4 million will be due. As a result of this refinancing, principal due subsequent to June 30, 2001 is classified as long-term debt in the "Consolidated Balance Sheets" at June 30, 2000. See Notes 10 and 16 in "Notes to Consolidated Financial Statements" for further discussion of the refinancing of the line of credit.