- Language: English
- Published: September 2014
- Region: Global
Texas Health Market Review 2013
- ID: 2671523
- October 2013
- Region: United States
- Allan Baumgarten
Texas Health Market Review 2013 finds:
- Texas HMOs enjoy strong profitability and enrollment growth
- Inpatient hospital utilization declines as new hospitals go up
Dallas/Fort Worth – Houston – After years of decline, enrollment in Texas HMOs has increased by 10% in each of the last two years. Profitability for both HMOs and hospitals has been strong, even though inpatient hospital utilization is flat or declining in major regions of the state.
These and other findings are reported in Texas Health Market Review 2013, Allan Baumgarten's eleventh annual report analyzing insurers and hospital systems in the Texas health care market. His report, which was first published in 1999, analyzes data on the HMOs and providers in the state, putting the data in the context of health reform and other developments driving changes in the market. Baumgarten is a Minnesota-based independent analyst, who also published and contributed to state health market reports in 11 other states: Arizona, California, Colorado, Florida, Illinois, Kentucky, Michigan, Minnesota, New York, Ohio and Wisconsin. The new report compares Texas HMOs to their counterparts in those states on several key measures.
The new report finds:
- HMO enrollment in the state has grown strongly in the past two years, and they now have more than 4 million members, the most ever. While enrollment in employer HMO plans has dropped to half a million, enrollment in HMOs contracting for the Medicaid and Children's Health Insurance programs has grown to more than 3 million. The largest HMOs in the state are now national Medicaid/CHIP plans such as AmeriGroup and Centene (doing business here as Superior Health Plan), and Texas Children's Health Plan.
- Medicare Advantage HMO plans have also enjoyed double-digit enrollment growth and have been the most profitable line of business for HMOs. More than half a million Texas seniors are now in HMO plans, and UnitedHealthcare's senior plans (formerly known as Secure Horizons) are the largest with more than 200,000 seniors. As a group, these senior plans enjoyed underwriting income of $460 million in 2012, and UnitedHealthcare alone had $310 million of that. The average operating margin for those plans was 7.4% and the average medical loss ratio was 82.3%. HealthSpring, which was acquired by CIGNA, had underwriting income of $74.4 million.
- Medicaid plans overall lost $74.3 million on their operations in 2012. While plans sponsored by hospitals like Parkland Community and Driscoll Children's were strongly profitable in 2012, four HMOs – Superior Health Plan, Molina Healthcare, UnitedHealthcare Community Plan and Community Health Choice – had combined operating losses of $161 million. Though Texas continues to expand it use of managed care for aged and disabled Medicaid recipients, creating a significant business opportunity for HMOs, it will not expand eligibility for Medicaid under the Affordable Care Act. By some estimates, implementing an expansion would reduce the number of uninsured by up to 1.3 million in the next five years. More than 6 million Texas residents are currently uninsured.
- Expansion of hospital systems, both investor-owned and non-profit, continues through mergers, acquisitions and new construction, as hospitals seek to expand their geographic reach, improve efficiency and quality and strengthen their negotiating ability with insurers. By far, the largest deal is the recently closed merger of the Baylor Health Care System in the Dallas-Fort Worth area with the Scott and White system, based in Temple. To gain access to patients in developing areas, hospital systems are investing billions in new patient towers, specialty centers and freestanding emergency department. As a result of this construction boom, there are now five acute care hospitals in Williamson County (north of Austin). Near Houston there are now five acute care hospitals in The Woodlands area and five in the Sugar Land area, while there are 14 acute and specialty care hospitals in Denton County.
- But while construction of new hospitals and other facilities continues at a rapid pace, growth in inpatient utilization has slowed and even fallen in some areas. For example, there are 500 new inpatient beds in acute care hospitals in the Dallas-Fort Worth area since 2008. Data from the state's annual hospital survey for 2011 shows that the number of inpatient days had fallen by 100,000 or 3%. On an average day in 2011, 62% of inpatient hospital beds were full compared to 65.9% in 2008. Similarly, inpatient days in Houston area hospitals decreased and average inpatient occupancy dropped from 66.9% in 2008 to 63.8% in 2011.
Hospitals continue to enjoy strong and growing profitability. For example, hospitals in the Dallas-Fort Worth area had net income of $1.584 billion in 2011, which was 10.3% of net patient revenues Baylor and HCA were the most profitable. Tables in the report provide detail by hospital and system. Led by HCA, Houston-area hospitals reported net income of $1.8 billion in 2011, an average margin of 11.9%. In San Antonio, hospitals reported net income of just under $500 million, of 10.9% of net patient revenues. Austin area hospitals had net income of $544.1 million in 2011, which is 15.5% of net patient revenues. Both the Seton and HCA-St. David's systems were strongly profitable. SHOW LESS READ MORE >