Wednesday, May 4, 2022
Contact Allan Baumgarten, 952-212-8589
Michigan Health Market Review 2021, Part Two finds:
Revenues and inpatient days dropped sharply for Detroit-area hospitals in 2020,
but they were still profitable;
Health insurers added members in 2021 but saw higher medical claims and lower profits
In 2020, the first year of the COVID-19 pandemic, Detroit-area hospitals saw their patient care revenues drop by more than $1.1 billion and their inpatient days by 4.9%. But they benefitted from $975 million in Provider Relief funds under the CARES Act and were profitable. Michigan health insurers profited from lower claims and higher enrollment in 2020, but saw their medical claims increase and profits decline in the first three quarters of 2021.
These and other findings are reported in Part Two of Michigan Health Market Review 2021, released today. The report is published by Allan Baumgarten, a Minneapolis-based analyst who currently publishes market reports in Michigan and five other states. This is the 25th annual edition of the Michigan analysis, and Part One of a new report for 2022 will be released in July. According to Baumgarten’s report:
- Detroit-area hospitals lost about $1.1 billion on patient care in 2020, as their revenues dropped by $1.13 billion or 9.9%. But they also collected $1.623 billion in other revenues, including $975 million in Provider Relief funds. In 2020, these hospitals had net income of $478.8 million, or 4% of net patient revenues of $12.068 billion. The Ascension hospitals and the Tenet Detroit Medical Center hospitals improved their results compared to 2019. Of the systems in the region, only the Henry Ford hospitals reported a loss, even after collecting other revenues of $505 million.
- Inpatient days for those hospitals dropped by 4.9%, to 2.122 million, their lowest level in the past 15 years. At the Beaumont Health hospitals, inpatient days dropped by almost 10% in 2020, while inpatient days grew slightly at the Ascension hospitals in the region.
- Average margins for hospitals in other parts of Michigan dropped from 6.8% in 2019 to 2.7% in 2020. They had a combined operating loss of $1.491 billion, offset by other revenues of $2.174 billion, including $464.3 million in Provider Relief funds. Health systems like Spectrum Health (which merged with Beaumont Health in 2022), Bronson Health and Munson Health, reported improved profits compared to 2019. Net income for Spectrum Health hospitals grew from $181.6 million in 2019 to $249.4 million in 2020. The University of Michigan hospitals, and the Ascension Health and Trinity Health hospitals outside the Detroit area, all reported losses in 2020. Inpatient days and inpatient occupancy rates also dropped for these hospitals.
- Enrollment in Michigan HMOs increased by 5.8% in the first nine months of 2021. Medicaid HMOs grew by 7%, or 144,000 members, after adding 289,000 members in 2020. In 2021, Blue Cross Complete added 31,000 Medicaid enrollees and Meridian Health, now part of Centene, added 23,000. The Medicaid HMO market here has consolidated, with Priority Health acquiring the Total Health HMOs and Henry Ford Health Alliance Plan buying Trusted Health Plan.
- Medical loss ratios for Michigan HMOs increased from 80.3% in the first nine months of 2020 to 86.3% in 2021. Profit margins decreased from 4.6% to 1.6%. During the first year of the pandemic, Michigan HMOs received fewer claims and improved their profits, as hospitals suspended non-emergent surgeries and patients deferred primary care and hospital care.
Excerpts from the report and subscription information are available at www.AllanBaumgarten.com Part One of Michigan Health Market Review 2022 is scheduled for release in July and will analyze a full year of financial results for Michigan health plans. The 2022 report will be the 26th annual edition of our Michigan market analysis, first published in 1997.
July 30, 2021
Michigan Health Market Review 2021 Finds:
Confounding gloomy predictions, Michigan HMOs post record profits and increase enrollment in the year of COVID-19
Despite the turmoil of the COVID-19 pandemic, Michigan HMOs posted their highest profits ever in 2020 and increased their enrollment by 10%. In addition, they gained 117,000 new members in the first quarter of 2021, adding new Medicaid, individual and Medicare Advantage enrollees. A proposed lawsuit settlement could result in new competition for employer group business in the state and new opportunities for Blue Cross Blue Shield of Michigan in other states.
These findings and others about Michigan health plan companies are presented in Part One of Allan Baumgarten’s Michigan Health Market Review 2021, released today. This is the 25th annual edition of the report, first published in 1997. Baumgarten, a Minneapolis-based analyst, examines financial metrics and enrollment trends in Michigan and five other states and weaves that data together with insights about competition and strategies in the market. The Part Two report for Michigan comes out later this year and will focus on the state’s hospital systems and their financial performance, inpatient utilization and competitive strategies. Key findings in the new report:
Enrollment in Michigan HMOs increased sharply in 2020 and again in the first quarter of 2021. After decreasing slightly in 2019, Michigan Medicaid HMOs added 289,000 members in 2020 and 73,500 more in the first three months of 2021, reaching 2.1 million. Medicare Advantage plans grew by 67.000 lives in 2020 and added 9,400 lives in the first quarter of 2021. Meridian Health Plan, now owned by Centene, remains the largest Medicaid HMO here, and added almost 64,000 Medicaid members since January 2020.
- Some of the growth was due to people losing jobs and benefits during the economic downturn, with some getting Medicaid coverage through the Healthy Michigan Plan and some 65 and older opting to enter Medicare. Some Medicaid enrollees retained benefits because states are not allowed to require reverification of eligibility under a federal law that increased Medicaid funding to states.
- Michigan HMOs reported net income of $551.2 million in 2020, up 14.4% from 2019. They reported an average profit margin of 2.9% compared to 2.7% in 2019. Their operating income increased $225 million, although their investment income decreased by $142 million, The two Blue Cross HMOs and the two Priority Health HMOs had the highest profits, $144.6 million and $135.9 million, respectively, while the McLaren Health HMOs had the highest margin, at 5.3%. Blue Cross Blue Shield of Michigan had net income of $315.5 million, well below its extraordinary profits of $905.3 million in 2019.
- Medicare Advantage plans were very profitable, increasing their underwriting income (before investments and taxes) from $79 million in 2019 to $406 million. Blue Cross Blue Shield had underwriting income of $208.1 million, up from $98.3 million in 2019, and Priority Health had underwriting income of $134.8 million, up from $31.9 million in 2019.
- Blue Cross Blue Shield and other Michigan insurers may face new competition, especially for employer group business. Blue Cross Blue Shield reserved $141 million to pay damages to employers based on a proposed settlement of a lawsuit brought against Blue Cross Blue Shield companies and their association. The settlement will relax rules that restricted how much Blue Cross Blue Shield plans could compete against each other in their franchise areas. Under the settlement, Anthem, Inc. will be able to approach Michigan employers for their business, while Blue Cross Blue Shield of Michigan will be able to compete against Blue plans in other states.
- Ten Michigan health insurers received a windfall totaling $154 million as the result of a favorable ruling by the U. S. Supreme Court. These companies had posted large losses in 2014-2016 on individual plans, some of which should have been made up by the Risk Corridor program of the Affordable Care Act. Those amounts were not paid until October 2020. Most of it went to Blue Cross Blue Shield and Priority Health companies, while some went to two insurers that are no longer in business.
Excerpts from the report, including the useful "Michigan HMOs at a Glance" page can be viewed at https://allanbaumgarten.com/. A subscription to Michigan Health Market Review 2021, including Parts One and Two, can be ordered online at https://allanbaumgarten.com/product-category/michigan/ Or call 952/212-8589; E-mail address: Baumg010@umn.edu
Michigan HMOs at a Glance
Ascension St. John Providence Health System
For links to the web sites of several dozen Michigan hospitals, go to:
Market Structure 4
Health Plans 4
Provider Systems 8
Trend Review 9
Health Plan Enrollment 9
Medicaid Managed Care 12
Medicare Plans 13
Net Income 14
Financial Results by Line of Business 17
Provider Payments 21
Health Plan Capital22
A Look Ahead 23
Market Structure 4
Market Analysis 8
Detroit Area Hospitals 8
Revenues and Net Income 10
Inpatient Occupancy and Payer Mix 12
Performance Bonuses and Penalties 14
Other Major Hospitals 16
Revenues and Net Income 16
Inpatient Occupancy and Payer Mix 16
Performance Bonuses and Penalties . 21
Health Plan Trends 21
HMOs Hospital Admissions 23
Health Plan Enrollment and Net Income 24
Medicaid Enrollment by Region 25
Effectiveness and Utilization of Care 26
A Look Ahead 28
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."