Wednesday, April 23, 2025
Contact Allan Baumgarten, 952-212-8589
Michigan Health Market Review 2024, Part Two:
Consolidation Creates Hospital Systems With Significant Market Power.
Profitability Improved in 2023 for Detroit-Area Hospitals
But Declined for Systems in Other Parts of State
(Detroit/Ann Arbor/Grand Rapids) Consolidation of Michigan hospital systems continues, giving three large systems significant market power. Net income for Detroit-area hospitals improved by nearly $600 million in 2023, but profits for hospitals in other regions dropped sharply. The new edition of Michigan Health Market Review analyzes Medicare cost report data for about 100 Michigan hospitals in the three-county Detroit area and in other regional markets. Allan Baumgarten, a Minneapolis-based analyst, first published his Michigan health provider and payer market analysis in 1997, and this is the 28th annual edition. Key findings in the new report:
- Consolidation of hospital systems continues in Michigan, creating three very large systems, each with a presence in key parts of the state. Based on 2023 data, the combined Henry Ford-Ascension health system in southeast Michigan had $6.55 billion in net patient revenues or 44.8% of the local hospital market. The University of Michigan hospital system, now including the Sparrow hospitals in the Lansing area and building a close affiliation with MyMichigan Health, had 2023 net patient revenues of more than $7 billion. And Corewell Health, including the former Spectrum hospitals in west Michigan and the Beaumont Health hospitals in the Detroit suburbs, had net patient revenues of $7.769 billion in 2023.
- Hospitals in southeast Michigan improved their financial results in 2023, reporting combined net income of $202.2 million in 2023, or 1.4% of net patient revenues of $14.642 billion. That is up nearly $600 million from their combined loss of $379.7 million in 2022. The Corewell Health hospitals were the most profitable, with net income of $135.1 million. Corewell was the most profitable system in the area in each of the last 10 years. The Henry Ford hospitals (not including Ascension in 2023) improved their results from a loss of $277.6 million in 2022 to a net gain of $13.2 million in 2023.
- Staffed beds and inpatient days for these hospitals dropped again in 2023. Inpatient days dropped 5.4% during the first year of the COVID-19 pandemic and have not reached pre-COVID levels since. In 2023, the Detroit Medical Center hospitals provided 27,000 fewer days and the Corewell hospitals provided 15,000 fewer days. Some systems have downsized their inpatient bed capacity, so rates of inpatient occupancy have increased, reaching 71.1% in 2023. To some extent, recent acquisitions and other deals were driven by the desire of health systems to increase or maintain market share in a market where the pie is shrinking.
- Hospital systems in other regions of the state saw their combined net income drop by 90% in 2023, from $307 million to $32.1 million, a margin of only 0.1%. These hospitals had their best financial results in 2021, when they had net income of nearly $3 billion, or 13.7% of their net patient revenue. In 2023, profitable systems included Corewell Health (margin of 5.8%), Trinity Health (net income of $238.1 million or 9.1%), Bronson Healthcare (margin of 10.2%) and University of Michigan ($179.5 million or 2.6%). Systems posting large losses in 2023 included Ascension Health, which is in the process of withdrawing from the Michigan market (loss of $188.8 million, or 16.9%), McLaren Health (loss of $378.8 million, or 20%), and ProMedica (loss of $169.4 million or 47.6%).
- The number of inpatient days provided by these hospitals dropped by 10.4% in 2023. Three systems provided about 20,000 fewer inpatient days in 2023 compared to 2022: McLaren Health, Ascension and Trinity. A relatively high percentage of the population in these areas is 65 and older, and Medicare covered 52.8% of inpatient days in 2023. Medicaid paid for 26.3% of inpatient days, although the number of days covered by Medicaid dropped by 72,000, to 598,000. That roughly matches the decline in Medicaid enrollment in Michigan, which dropped by 22% between June 2023 and June 2024.
Excerpts from the report and subscription information are available at www.AllanBaumgarten.com
Thursday, August 29, 2024
Michigan Health Market Review 2024 Finds:
Medicaid Managed Care Membership and Revenues Drop Sharply
Medicare Advantage Membership Grows, But Michigan Plans Lost $194 Million in 2023
It sounds very contradictory: In Michigan, Medicaid HMOs have lost 15% of their members, but were still strongly profitable in 2023. Medicare Advantage plans have increased enrollment but have lost $392 million in the last two years.
These findings and others are presented in Part One of Allan Baumgarten’s Michigan Health Market Review 2024, released today. This is the 28th annual edition of the report, which he first published in 1997. Allan Baumgarten is a Minneapolis-based analyst who examines financial measures, enrollment trends and competitive strategies for health insurers and hospital systems in Michigan and five other states. The forthcoming Part Two report will analyze 2023 data on the financial performance, inpatient utilization and competitive strategies of the hospital systems in the state.
Key findings in the new report:
- After growing by 275,000 lives between the end of 2020 and June 2023, enrollment in Medicaid HMOs has now fallen by 336,000 lives, or 16.4% through the first quarter of 2024. As in other states, Michigan’s Medicaid agency began a process of reviewing current eligibility for the 3 million beneficiaries in the state, about 90% of whom are in managed care plans. For example, enrollment in Meridian’s Medicaid plans dropped by more than 121,000 or 21.7% since the end of 2022.
- Based on an average premium of $346 per member per month, Medicaid HMOs could see their revenues reduced by $1.4 billion in 2024. That likely also means less revenue for hospitals and clinics, especially safety net providers that see a high number of patients covered by Medicaid or uninsured.
- While Medicaid enrollment has decreased, health plans have seen enrollment in individual plans and Medicare Advantage plans grow sharply in the past 15 months. In the first quarter of 2024, enrollment in individual health plans increased by 21.7%, with Meridian Health adding 32,000 new enrollees and Priority Health gaining almost 17,000.
- Medicare Advantage plans have enjoyed steady growth in recent years and added almost 108,000 members in 2023. Three Humana companies added 35,000 members in Michigan, and three UnitedHealthcare companies added almost 24,000 lives. However, Medicare Advantage plans, both for seniors and persons dually eligible for Medicaid and Medicare, reported combined losses of $190 million. Blue Cross Blue Shield Mutual alone lost $142 million in 2023, while four HMOs – Aetna, Blue Care Network, Physicians Health Plan and Priority Health – reported large losses.
- The growth of Medicare Advantage enrollment has implications for hospital systems and physicians. Those plans are notorious for limiting provider payments and using prior authorization to limit care.
- Combined net income for Michigan HMOs dropped from $542 million in 2022 to $456.9 million in 2023., which was 1.8% of underwriting revenues of $25.817 The HMOs that were most profitable were Medicaid managed care plans UnitedHealthcare Community Plan and Molina Healthcare.
- By far, Medicaid was the most profitable line of business, with underwriting income of $253.7 million and combined underwriting income in the last four years of $945 million. Only one Medicaid HMO, HAP-CareSource, was not profitable in 2023.
Excerpts from the report, including the "Michigan HMOs at a Glance" page can be viewed at https://allanbaumgarten.com/. A subscription to Michigan Health Market Review 2024, including Parts One and Two, can be ordered online at https://allanbaumgarten.com/product-category/michigan/ Or call 952/212-8589; E-mail address: [email protected]
Ascension St. John Providence Health System
Blue Cross Blue Shield of Michigan
Henry Ford Health System (Health Alliance Plan)
Michigan Association of Health Plans
Michigan Center for Rural Health
Michigan Department of Health and Human Services
Michigan Health and Hospital Association
Michigan Department of Financial and Insurance Services
Michigan State Medical Society
Michigan State University College of Human Medicine
Spectrum Health System, Grand Rapids
University of Michigan Medical Center
For links to the web sites of several dozen Michigan hospitals, go to:
http://www.mha.org/about/hospitals.htm
Part One
| Introduction | | 3 |
| Market Structure | | 4 |
| Health Plans | | 4 |
| Provider Systems | | 8 |
| Trend Review | | 8 |
| Health Plan Enrollment | | 8 |
| Individual Plans and the Marketplace | | 10 |
| Medicaid Managed Care | | 10 |
| Medicare Plans | | 12 |
| Health Plan Revenues and Income | | 13 |
| Financial Results by Line of Business | | 15 |
| Provider Payments | | 21 |
| Administrative Expenses | | 22 |
| Health Plan Capital | | 23 |
| A Look Ahead | | 25 |
Part Two
| Introduction | | 5 |
| Michigan Hospitals and Health Systems | | 6 |
| Detroit Area Hospitals | | 9 |
| Revenues and Net Income | | 11 |
| Inpatient Occupancy and Payer Mix | | 13 |
| Performance Bonuses and Penalties | | 15 |
| Other Major Michigan Hospitals and Systems | | 16 |
| Revenues and Net Income | | 17 |
| Inpatient Occupancy and Payer Mix | | 19 |
| Performance Bonuses and Penalties | | 21 |
| Health Plan Trends | | 24 |
| Hospital Discharges by HMO and System | | 24 |
| Health Plan Enrollment and Finances in 2021 | | 24 |
| A Look Ahead | | 27 |
MICHIGAN HEALTH MARKET REVIEW 2020, PART ONE, RELEASED JULY 16, 2020: “SUPERSIZE INVESTMENT REVENUES BOOST MICHIGAN HEALTH PLANS TO RECORD PROFITS IN 2019; ENROLLMENT IN MEDICARE PLANS GROWS BY 15%”
MICHIGAN HEALTH MARKET REVIEW 2019, PART TWO, RELEASED MAY 7, 2020: “NET INCOME AND INPATIENT VOLUME DROPPED SHARPLY FOR MICHIGAN HOSPITALS IN 2018; HEALTH INSURERS ENJOYED STRONGER PROFITS IN 2019”
- Jay Greene wrote in Crain’s Detroit Business: “Report: Health plan profits drop first quarter, but experts project rose year ahead with more rebates.” Click here to read
Michigan Health Market Review 2018, Part One to be released April 25. Get pre-publication special pricing and read Jay Greene's pre-publication reporting:
- Jay Greene wrote in Crain's Detroit Business: "Health plan enrollment, profits hit record highs." Click here to view
Michigan Health Market Review 2017, Part Two, released February 27, 2018: "Detroit hospitals increase operating income by more than $100 million; Michigan health systems continue growth, consolidation and partnership strategies; Increased HMO enrollment boosts 2017 profits"
- Jay Greene wrote in Crain's Detroit Business: "Hospitals, health plans posted strong margins for 2016-17, but future could be rougher" Click here to view
Michigan Health Market Review 2017, Part One released July 19: "Medicaid plans add members but profits drop sharply; HMOs and insurers post large losses on individual plans"
- Jay Greene wrote: "Michigan health plan profits drop in 2016 by 8% but enrollment up 5%." Click here to view
Michigan Health Market Review 2016, Part Two, released May 8, 2017: "Medicaid expansion helps Michigan health systems to best net income; HMO enrollment grows in Medicaid, Individual and Medicare plans"
- Karen Bouffard wrote in the Detroit News: "Beaumont, DMC posted strongest profits ever in 2015." Click here to view
- Jay Greene wrote in Crain's Detroit Business: "Report: Michigan hospitals, health plans post slightly lower, but still strong, profit margins in 2015" Click here to view
Michigan Health Market Review 2016, Part One released July 27: "Medicaid Expansions Adds 183,000 HMO Members in 2015 and 2016, Increases HMO Profits
- Jay Greene wrote in Crain's Detroit Business: "Michigan health insurers post near-record profits in 2015." Click here to view
- Karen Bouffard wrote in the Detroit News: "Michigan Medicaid HMOs earn highest profits in decade." Click here to view
- Mark Sanchez wrote in MiBiz: "In first full year of under state Medicaid expansion, HMO underwriting income spikes 83 percent." Click here to read
- JC Reindl wrote in the Detroit Free Press: "Affordabe Care Act rates may jump 17.3% in Michigan." Click here to read
- Sarah Hulett reported for Michigan Radio: "Insurers asking for average 17% rate increase for individual plans." Click here for her report
Michigan Health Market Review 2015, Part Two, released March 7, 2016: "Consolidated Michigan hospitals report higher profits even as inpatient days are flat; Enrollment in health plan surges but profits drop"
- Jay Greene wrote in Crain's Detroit Business: "Michigan hospitals post impressive profit margins" Click here to view
Michigan Health Market Review 2015, Part One, released August 12: "HMO Enrollment Grows Sharply; Medicaid HMOs Add Members and Improve Profits."
- Karen Bouffard wrote in the Detroit News: "Enrollment up in Michigan Medicaid HMOs, individual plans
- Jay Greene wrote in Crain's Detroit Business: "Operating income of Michigan Medicaid HMOs rises 295% in 2014"