- Language: English
- Published: November 2011
Colorado Health Market Review 2013
- Published: May 2013
- Region: United States
- Allan Baumgarten
Profitability is strong for Colorado hospitals and health plans; Hospital capacity grows, but utilization is flat
(Denver) Both hospitals and health plans reported very strong profits in 2012 and 2011. HMOs added 40,000 new members in 2012, mostly in Medicare and Child Health plans. Provider integration and consolidation continued, as systems prepare for the implementation of national health reform.
In this new report, Baumgarten finds:
Denver area hospital systems enjoyed very strong profits in 2011
Denver area hospitals have enjoyed strong and growing profits for the past 10 years. Based on an analysis of Medicare cost reports, hospitals in the Denver area had pre-tax net income of $774.6 million in 2011, or 12.3% of net patient revenue of $6.273 billion. HealthOne/HCA is the largest and most profitable system in the region, with between 30% and 32% of the hospital market. HealthOne/HCA had net income before taxes of $428.5 million, which is 20.9% of net patient revenue. All but $17.2 million of that was from operations, and the system's Sky Ridge and Swedish hospitals were especially profitable. Other hospital systems were less profitable from their operations but benefited from other revenues, such as philanthropy, investments and government grants. The Centura hospitals in the Denver area had net income of $61.5 million (5.4%) while the three Exempla hospitals had net income of $67.3 million, or 6.8% of net patient revenues. The University of Colorado hospital, which has aligned in the past year with the Poudre Valley hospitals in northern Colorado and the Memorial hospital in Colorado Springs, was one of the most profitable hospitals in 2011.
Inpatient occupancy rates have declined for Denver area hospitals.
Inpatient occupancy averaged 65.8% for these hospitals, down from 69.2% in 2008. Seven new or replacement hospitals have been built in the past ten years and several hundred inpatient beds have been added, but utilization is largely flat. Fewer people have comprehensive benefits and may be deferring care. In addition, Medicare and other payers are pressing hospitals to improve care management and avoid some hospital admissions. Still, new construction of hospital wings, clinics and specialty centers continues at a brisk pace.
In 2012, Colorado HMOs had net income, after tax, of $178.3 million, 4.2% of underwriting revenues.
HMO profit margins have not fallen below 3% in the past five years. Medicare Advantage plans at PacifiCare and Kaiser Permanente accounted for the largest share of HMO net income. Those plans have added almost 50,000 seniors in Colorado in the past four years.
Colorado is moving ahead on expansion of Medicaid eligibility and establishment of a state health insurance exchange, creating opportunities and challenges.
About half of the state's nearly 800,000 uninsured could gain coverage in the next four years, either through Medicaid or subsidized coverage available through the state's new exchange. SHOW LESS READ MORE >