Colorado Health Market Analysis: Profitable Hospital Systems and Growing Health Insurers

  • ID: 4429653
  • Report
  • Region: United States
  • 30 Pages
  • Allan Baumgarten
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Enrollment in HMOs Grew by 8.2% in 2015 and 7.1% in 2016, and is Now More than 1.5 million

(Denver) For the tenth straight year, Denver-area health systems posted higher pre-tax profits. Colorado health plans regained profitability and continued to add new members.

These and other findings are reported in Colorado Health Market Review 2017. First published in 1994, this is the 19th annual edition of Allan Baumgarten's analysis of trends, competition and strategies in Colorado's health care payer and provider markets. Baumgarten, a Minneapolis-based independent analyst and researcher on health finance in local markets, publishes market reports in Colorado, Florida, Illinois, Michigan, Minnesota, New York (co-author), Ohio, Texas and Wisconsin.

In the new Colorado Analysis, Baumgarten Finds:

Denver-area hospitals continue to enjoy strong profits, year after year.

Based on an analysis of Medicare cost reports, Denver-area hospitals reported net income in 2016 of $1.324 billion, or 15.2% of net patient revenues. Three large systems - HCA/HealthOne, Centura and SCL Health - increased their profits compared to 2015. The HCA/HealthOne hospitals posted average pre-tax margins of 35.7%, while Centura hospitals had margins of 6%. The University of Colorado hospital, now the hub of the largest hospital system in the state, had net income of $221.5 million, less than in 2015, but still a margin of 15.2%. I

Hospitals in other parts of the states were also strongly profitable.

An analysis of 25 hospitals in other parts of the state showed an average margin of 8.5%, with hospitals like Banner McKee (Loveland), Centura St. Anthony Summit and UC Poudre Valley (Fort Collins) posting margins of 15% or more.

Inpatient occupancy in Denver hospitals fell from 69.2% in 2008 to 64.9% in 2016.

Denver-area systems have made significant capital investments, building five new hospitals in growing suburban areas and five large replacement hospitals. Even as capacity has increased, inpatient utilization has been largely flat. In the past two years, systems have made new investments in micro-hospitals and free-standing emergency departments in the Denver area, and constructed new or replacement hospitals in Colorado Springs, Fort Collins, Greeley and Grand Junction. The University of Colorado Health system has been especially active, completing or building five new hospitals since 2016, on a path to establishing a regional health system in Colorado and Wyoming.

Profitability for Colorado health plans recovered in 2016, after posting losses in 2015.

Colorado HMOs reported net income of $78.1 million in 2016, or 1.1% of underwriting revenues. Most of that was from PacifiCare, a UnitedHealth Group company, which posted after-tax profits of $73.4 million on its Medicare Advantage plans in Colorado, Arizona and Nevada. Kaiser Permanente, the largest health insurer in the state, has only broken even or lost money in 2016 and 2015. Anthem Blue Cross Blue Shield and its HMO Colorado subsidiary had net income of $90 million in 2016, including operations in Nevada.

Insurance coverage has increased in the state, with many of the newly insured enrolling in HMOs.

In four years, the number of Colorado residents with health insurance increased by almost 675,000. Enrollment in HMOs grew by 8.2% in 2015 and 7.1% in 2016, and is now more than 1.5 million. Much of the growth has come from Medicaid plans, as Colorado was one of the first states to expand eligibility under the Affordable Care Act. Enrollment in individual plans continues to grow, as well, although that market segment is struggling with high premium increases and fewer competitors.

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1. Introduction

2. Market Structure

3. Health Plan Companies

4. Colorado Provider Systems

5. Trend Review

6. Health Plan Enrollment

7. Medicare and Medicaid Plans

8. Revenues and Net Income

9. Finances by Lines of Business

10. Payments and Administrative Expesnes

11. Health Plan Capital

12. Hospitals and Hospital Systems

13. Denver Area Hospitals

14. Revenues and Net Income

15. Occupancy and Payer Mix

16. Medicare Bonuses and Penalty Programs

17. Other Colorado Hospitals

18. Revenues and Net Income

19. Occupancy and Payer Mix

20. Medicare Bonuses and Penalty Programs

21. A Look Ahead

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