Minnesota

NEWS RELEASE

For Release on Wednesday, December 18, 2024

Enrollment in Medicaid HMOs Falls 20%,

But Rates of Care Utilization Are Higher

Twin Cities Hospital Systems Returned to Profitability in 2023.

            By the time Minnesota completed its review of eligibility for Medicaid recipients, enrollment had dropped by 20%. However, the remaining beneficiaries were, on average, higher users of care. After posting losses of $425.5 million in 2022, Twin Cities hospitals were profitable again in 2023. Led by the Mayo Clinic health system, hospitals serving Greater Minnesota communities increased their profits by 68.2% in 2023.

            Part Two of Minnesota Managed Care Review 2024 uses data from Medicare facility cost reports for 2023 to analyze hospital financial results and utilization measures, and updates changes in Medicaid managed care enrollment and medical expenses through the first half of 2024. The report compares data for 32 hospitals in the Twin Cities area, including four in western Wisconsin that are part of Minnesota systems, and more than 50 hospitals serving communities in Greater Minnesota, including the Mayo and Gundersen hospitals in La Crosse, WI and the Sanford and Essentia hospitals in Fargo and Sioux Falls. The report organizes the financial and utilization data around the major health systems: Fairview, Allina and HealthPartners in the Twin Cities and Mayo Clinic, Essentia, CentraCare and Sanford Health serving communities in Greater Minnesota.

            Key findings in the new report:

• Enrollment in Medicaid HMOs dropped by 20% between June 2023 and June 2024, dealing a sharp blow to their revenues and profits. Enrollment dropped from 1.2 million to 974,000 and their revenues dropped by $372 million. Their medical loss ratios increased from 87.2% for the first six months of 2023 to 93.9% for the first six months of 2024. Rate of inpatient hospital admission increased, suggesting that many still covered by Medicaid were above average utilizers of care.

• After losing $425.5 million in 2023, hospitals in the Twin Cities area reported combined net income of $147.7 million, or 1.1% of their net patient revenues. They lost $949 billion on patient care but collected other revenues from investments, philanthropy and government grants) of $1.117 billion. By comparison, they had net income of $671.6 million in 2021 or 5.7% of revenues and net income of $308.8 million in 2020, the first two years of the COVID-19 pandemic. Since 2013, these hospitals had combined net income over $600 million four times and net income above $500 million three other times.

• The HealthPartners hospitals posted the strongest net income for the fifth straight year, and the Fairview hospitals posted a modest profit for the first time since 2019. HealthPartners hospitals, including Methodist and Regions, had combined net income of $167.5 million in 2023. The Fairview hospitals, including the University of Minnesota hospital, the largest in the region, had combined net income of $53 million. However, the Allina Health hospitals in the Twin Cities reported a loss of $179.2 million in 2023, even more than their loss of $144.6 million in 2022. North Memorial Health was strongly profitable in Maple Grove but lost money at its main Robbinsdale facility.

• Hospitals serving Greater Minnesota communities increased their net income by 68.2% from $1.139 billion in 2022 (6.7%of revenues) to $1.917 billion in 2023, or 10.8% of revenues. After reporting net income of $1.073 billion in 2022, the Mayo Clinic hospitals in Minnesota and La Crosse, WI, increased their net income by 16.7% to $1.252 billion in 2023. The Sanford Health hospitals in Minnesota, Sioux Falls and Fargo improved their net income from $180.5 million in 2022 to $342.5 million in 2023. The CentraCare/Carris hospitals in central Minnesota improved their results from a loss of $6.6 million in 2022 to net income of $116.1 million in 2022.

Inpatient hospital days at Twin Cities hospitals have mostly been flat for the past 15 years. They increased s little in 2023 to 1.56 million, about the same as before the COVID-19 pandemic. Inpatient days fell by 3% in 2023 at the outstate hospitals in this analysis.

This is the 35th year that we have published Minnesota Health Market Review. Part One of the 2025 edition is scheduled for release in May. The Part One report will examine 2024 data on the enrollment trends and financial results of Minnesota health plans as well as legislative developments in health policy and regulation. Excerpts from the market reports and subscription information can be found at www.AllanBaumgarten.com

NEWS RELEASE

July 11, 2024                                                          Contact: Allan Baumgarten, 952/212-8589

Minnesota Health Market Review 2024 finds:

Enrollment in Medicaid HMOs drops 13.5% in first quarter

Will Likely Reduce Their Revenues by More Than $1 Billion

             (Minneapolis-St. Paul) Enrollment in Medicaid managed care, the largest and most profitable line of business for Minnesota HMOs, has dropped sharply, affecting their premium revenues and profitability and likely reducing revenues to hospitals and clinics.

            These and other findings are reported in Part One of Minnesota Health Market Review 2024, released today by Allan Baumgarten. This is the 35th edition of the report, first published in 1990. His research analyzes key trends and competitive strategies for health plan companies and hospital systems serving Minnesota communities. Later this year, the Part Two report will present an analysis of the state’s hospital systems and how they compete, examining 2023 data on their financial results and measures of inpatient utilization.

The new report finds that: 

• In the past 10 years, Minnesota HMOs and County-Based Purchasing plans have recorded $1.579 billion in underwriting income on Medicaid managed care and other public programs. Those enrollees now account for 72% of the membership of the HMOs and County-Based Purchasing (CBP) plans.

• In the first quarter of 2024, enrollment in Medicaid HMOs dropped by about 156,000 or 13.6%. Enrollment decreased by almost 61,000 at UCare and by 52,000 at Blue Plus. Beginning in July 2023, Minnesota began the process of reverifying eligibility for Medicaid. As of June 2024, more than 354,000 have been disenrolled from the program, most of them in managed care plans, and many of them dropped for “administrative reasons.” On an annual basis, those enrollees losing benefits in the first quarter would account for more than $1 billion in revenues to the health plans.
• After posting record profits in 2022, driven by strong results for the public programs, net income for Minnesota HMOs dropped by 77.5% in 2023. Minnesota HMOs had net income of $148.9 million in 2023, or 0.9% of their premium revenues. That was down from net income of $635.8 million in 2022, or 4.3% of revenues. Underwriting income from the public programs dropped from $726.5 million in 2022 to $393.9 million in 2022. UCare, the largest HMO in the state, saw its underwriting income on public programs drop from $276.4 million in 2022 to only $8.5 million in 2023. HealthPartners had underwriting income of $186.9 million on its public programs but lost $167 million on its commercial and Medicare plans. Blue Cross Blue Shield was profitable on its employer group plans but lost $103.4 million on its Medicare Advantage plans.

            Excerpts from the report, including the “Minnesota Health Plans at a Glance” page can be viewed at AllanBaumgarten.com. Subscriptions to Minnesota Health Market Review 2024 in interactive PDF format, including both Parts One and Two, can be ordered and downloaded for $160.00 at www.AllanBaumgarten.com. Phone: 952/212-8589. E-mail address: [email protected]

Allan Baumgarten currently publishes reports analyzing health care payer and provider markets in Minnesota and five other states: Colorado, Florida, Michigan, Ohio and Texas. He conducts project research for his clients and has completed four studies of health plan and provider system strategies for the Robert Wood Johnson Foundation. More information about those projects is available at his website.

Exhibit 1: Minnesota Health Plans at a Glance, 2021

2022 data set for Minnesota

Minnesota Part One

Minnesota Part Two

• Christopher Snowbeck wrote in the Minneapolis StarTribune: "Operating Losses Swamp Investment Gains at Health Plans in Minnesota" Click here to view​​

• Christopher Snowbeck wrote in the Minneapolis StarTribune: "Study: Big hospitals outside Twin Cities grow profits." 
• David Montgomery wrote about the 2015 report in the St. Paul Pioneer Press: "Metro hospital profits fell in 2014, while outstate earnings rose"
• Dan Diamond wrote about the 2015 report in Poiltico Pulse: "The Mayo Clinic had a nearly 18 percent profit margin"

Minnesota Health Market Review 2016, Part One, released May 25: "HMO Profits for Public Programs Surpass $230 Million; Medicaid Enrollment Grows But Individual Market Remains Volatile; Hospitals Double Down on Health Plan Strategy"

• Christopher Snowbeck wrote in the Minneapolis StarTribune: "Record HMO profits from state programs." Click here to view