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Michigan Health Market Review 2018 (Part Two): Net Income for Hospitals in Other Parts of the State Increased by About 35% in 2017, on Top of an Increase of 32.3% in 2016 - ResearchAndMarkets.com

April 15, 2019

DUBLIN--(BUSINESS WIRE)--Apr 15, 2019--The “Michigan Health Market Review 2018, Part Two” report has been added to ResearchAndMarkets.com’s offering.

Michigan hospitals and health insurers report improved profits, driven by continued consolidation and coverage expansions of the Affordable Care Act.

Hospitals across the state continue to enjoy growing profitability, benefiting from the increased number of persons gaining Medicaid and individual coverage. Yet, hospital systems are increasingly dependent on Medicare and Medicaid and especially vulnerable to proposed reductions in those programs. In the first nine months of 2018, Michigan health plans enjoyed improved profitability and growing enrollment.

Part Two of Michigan Health Market Review 2018 presents these findings and an examination of the competitive strategies of hospital systems in the state. Using 2017 data from Medicare cost reports and other sources, the report analyzes hospital finances and inpatient utilization for all general acute care hospitals in the Detroit area and 65 hospitals in other parts of the state. It also reports enrollment growth and profitability for Michigan health plans through September 2018.

Key Findings

  • Although their operating income decreased in 2017, Detroit area hospitals enjoyed a large increase in non-operating revenues and 3.7% higher net income. These hospitals, almost all of them organized into six large systems, had net income of $679.3 million in 2017, or 5.5% of net patient revenues of $12.462 billion. Their operating income decreased from $238.6 million in 2016 to $165.6 million, but they had $554 million in other revenues, including investments, philanthropy, and government grants. This is the fourth straight year where these hospitals had combined profits or more than a half billion dollars. Two large systems reported major swings in net income. After three straight years of growing profitability, the Beaumont Health System, the largest in the region, saw its net income drop by 25%, from $360.5 million in 2016 to $271.8 million in 2017. The Ascension/St. John hospitals doubled their net income from $65.7 million in 2016 to $134.4 million in 2017.
  • Net income for hospitals in other parts of the state increased by about 35% in 2017, on top of an increase of 32.3% in 2016. Our analysis of data for 65 hospitals outside of the Detroit area showed that they had net income of $1.488 billion in 2017, or 8.6% of net patient revenues, up from $1.104 billion in 2016. While their operating losses grew sharply in 2017, their other revenues grew even faster. Three of the largest outstate systems had margins of 10% or more: McLaren Health Care (10.6%), Trinity Health (17.2%) and University of Michigan Health, including MetroHealth in Kent County and the five Mid-Michigan hospitals (10%).
  • Inpatient hospital days increased slightly for Detroit area hospitals for 2017 but are still 10% less than at their peak in 2007. In 2007, Detroit-area hospitals provided 2.5 million days of inpatient care, but that number has declined almost every year since. The number of inpatient days covered by Medicaid has increased since 2014 when Michigan expanded Medicaid eligibility to more than 600,000 single adults without children. In 2017, Medicare and Medicaid paid for 79.1% of inpatient days in Detroit-area hospitals.
  • 21 Michigan provider organizations have contracted with Medicare Accountable Care Organization program, and 11 of them earned shared savings. In 2017, Michigan ACOs had a total of 511,000 enrolled beneficiaries and earned shared savings of $69.5 million.
  • Enrollment in HMOs increased slightly in the first three quarters of 2018. Michigan HMOs added 6,000 enrollees, and Blue Cross Blue Shield Mutual added 38,000 enrollees. Health plan profitability was much improved in 2018. HMOs had net income of $410 million in the first nine months of 2018 compared to $313 million in the same period a year earlier. Blue Cross Blue Shield improved its net income from $357.2 million in the first three-quarters of 2017 to $648 million in 2018.

Companies Mentioned

  • Blue Cross Blue Shield
  • McLaren Health Care
  • Trinity Health
  • University of Michigan Health

Topics Covered

1. Introduction

2. Market Structure

3. Market Analysis

4. Detroit Area Hospitals

  • Revenues and Net Income
  • Inpatient Occupancy and Payer Mix
  • Performance Bonuses and Penalties

5. Other Major Hospitals

  • Revenues and Net Income
  • Inpatient Occupancy and Payer Mix
  • Performance Bonuses and Penalties

6. Health Plan Trends

  • HMOs Hospital Admissions
  • Health Plan Enrollment and Net Income
  • Medicaid Enrollment by Region
  • Effectiveness and Utilization of Care

7. A Look Ahead

For more information about this report visit https://www.researchandmarkets.com/r/w12f90

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SOURCE: Research and Markets

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PUB: 04/15/2019 10:53 AM/DISC: 04/15/2019 10:53 AM