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Colorado Health Market Review 2021

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  • December 2021
  • Region: United States
  • Allan Baumgarten
  • ID: 4845584

Colorado HMOs Increased Their Profits by 13% in 2020 to $662.3 Million, More Than in any Previous Year

In the first year of the COVID-19 pandemic, Colorado health insurers increased their enrollment by 10% and posted record profits. Even though hospital systems in the state saw their profits decrease in 2019 and 2020, Denver-area hospitals still had average pre-tax profit margins above 10%.

Key findings in the new report:

After breaking records in 2018, Denver-area hospitals reported lower profits in 2019 and 2020. Based on financial data from Medicare cost reports, 28 Denver-area hospitals reported combined pre-tax net income in 2020 of $1.384 billion, or 11.4% of net patient revenues of $11.085 billion. That was down from a net income of $2.104 billion in 2018 and $1.937 billion in 2019. In 2020, these hospitals had an operating income of $246.2 million, a billion dollars less than in 2019. But they had other revenues of $1.084 billion, including several hundred million in COVID-19 Provider Relief Funds, as well as government grants, philanthropy and investment income.

As in past years, the HealthONE-HCA hospitals were the most profitable, with average pre-tax margins of 24.4%, much less than 45.5% in 2018. The University of Colorado Health system is the largest in the state with net patient revenues from its hospitals of $4.348 billion. It had a net income in 2020 of $629.7 million, or 14.5% of net patient revenues. About 62% of its net income was from its main hospital in Aurora, while its hospitals in Colorado Springs and Fort Collins accounted for most of the rest. Centura Health was the only large system that reported increasing its net income, from $258.8 million in 2018 to $359.6 million (11.5% of revenues) in 2020. The SCL Health hospitals reported a net income of $112 million or 6.1%, down from 10.3% in 2018. SCL has announced plans to merge with Intermountain Healthcare, a large system based in Utah.

Hospital systems in Colorado have made significant investments in hospitals, emergency rooms and other facilities, yet inpatient utilization has been flat in the past three years for Denver-area hospitals. Hospitals in the Denver Metro area provided 1.278 million days of inpatient care in 2020, about the same as in 2018. Hospitals in other parts of the state provided about 4% fewer inpatient days in 2020 compared to 2019, and their average occupancy rate dropped to about 57%. The University of Colorado health system has grown to seven hospitals outside the Denver area, after acquiring or building five hospitals in the past five years.

Colorado HMOs increased their profits by 13% in 2020 to $662.3 million, more than in any previous year. Profits were especially strong for individual, large group and Medicare Advantage plans. Kaiser Permanente improved its net income from $245.2 million in 2019 to $378.4 million or 9.2% of revenues in 2020. PacifiCare, a UnitedHealth Group company, posted a net income of $205.9 million for its Medicare Advantage plans in Colorado, Arizona and Nevada. Blue Cross Blue Shield’s PPO plans had a net income of $225.5 million, or 12.3% of revenues.

Additional claims for treating COVID-19 patients were more than offset by savings as hospitals suspended non-emergent surgeries and patients elected to defer care. Average medical loss ratios for large group plans dropped from 97.6% in 2018 to 87.6% in 2020. Data from the first three quarters of 2021 shows medical expenses increasing and HMO profits decreasing.

Enrollment in Colorado health plans increased by 10.5% in 2020 and continued to grow in 2021. Enrollment in HMOs reached an all-time high of 1.761 million in 2020, with growth in individual and Medicaid plans. Enrollment in Medicare Advantage plans has grown steadily, and the penetration rate is now 43.2% compared to 37.4% two years earlier. PacifiCare and Kaiser Permanente have the largest HMO plans, and UnitedHealthcare has the largest Medicare PPO plans.

Table of Contents

  • Introduction
  • Market Structure 
  • Health Plan Companies
  • Colorado Provider Systems 
  • Trend Review
  • Health Plan Enrollment
  • Medicare and Medicaid Plans 
  • Revenues and Net Income
  • Finances by Lines of Business 
  • Payments and Administrative Expenses 
  • Health Plan Capital
  • Hospitals and Hospital Systems 
  • Denver Area Hospitals
  • Revenues and Net Income
  • Occupancy and Payer Mix
  • Medicare Bonuses and Penalty Programs 
  • Other Colorado Hospitals
  • Revenues and Net Income
  • Occupancy and Payer Mix
  • Medicare Bonuses and Penalty Programs 
  • A Look Ahead 

Companies Mentioned

  • Blue Cross Blue Shield
  • Centura Health
  • HealthONE (HCA Healthcare)
  • Intermountain Healthcare
  • Kaiser Permanente
  • PacifiCare
  • SCL Health
  • UnitedHealth Group
  • University of Colorado Health


The reports analyzing state health care markets are intended to be a resource to health care organizations facing a full range of challenges but also seeking to identify and benefit from opportunities that present themselves. 

This report is presented in three main sections. The first part, Market Structure, describes the major health insurers and hospital systems in the state, showing recent entrants and the high-level of consolidation that has occurred in both the health plan and provider markets. Market Trends, the next section, presents our analysis of enrollment trends and financial results for the health insurers. The last section contains our analysis of financial and inpatient utilization data on the hospitals in the state.

The analysis of health plan companies is based on their annual and quarterly statements filed with the Department of Insurance, including forms prescribed by the National Association of Insurance Commissioners and supplemental reports required by the state. The publisher also uses Medicaid data from the Department of State Health Services and Medicare health plan and hospital data from the Centers for Medicare and Medicaid Services. The publisher has that data together with insights that they have gained in interviews with dozens of leaders in health care organizations in the state.