Skip to content

Minnesota

Reports
HMOs at a Glance
Data Set Summary
State Links
Report Contents
Media Coverage/Presentations
Reports

 

Minnesota Health Market Review 2021, Part Two finds:

In first year of pandemic, hospitals report fewer inpatient days, mixed financial results;

HMOs increase enrollment and see higher medical expenses in 2021

 

            Minnesota health systems had mixed financial results in 2020, the first year of the COVID-19 pandemic. Most lost money on patient care operations but some systems had large other revenues and even improved on their net income from 2019. HMOs increased their enrollment in the first nine months of 2021, adding 83,000 members in Medicaid plans.

 

            Part Two of Minnesota Managed Care Review 2021, released today, analyzes hospital system finances based on data from 2020 and updates health plan data through the first nine months of 2021. Allan Baumgarten, a Minneapolis-based analyst, has published his Minnesota market analysis since 1990. Baumgarten uses data from Medicare cost reports, health insurer quarterly and annual statements and other sources and shows some impacts of the COVID-19 pandemic on hospitals in 2020 and health plans in the first nine months of 2021.

 

            The analysis examines data for 32 hospitals in the Twin Cities area, including four in western Wisconsin that are part of Minnesota systems, and 50 hospitals serving communities in outstate Minnesota. The report presents data for the major health systems, including Fairview, Allina and HealthPartners in the Twin Cities and Mayo Clinic, Essentia, CentraCare and Sanford Health in outstate Minnesota.   Using quarterly statement data for the first nine months of 2021, the report shows the impact of the COVID-19 pandemic on Minnesota insurers, including Blue Cross Blue Shield, UCare and HealthPartners.

 

            In the new report, Baumgarten found:

 

  • Twin Cities area hospitals reported net income of $305.1 million in 2020, or 2.9% of net patient revenues. Patient care revenues were down by 7.4% from 2019, and combined net income was off by 49% from their very strong results in 2019. Even though the COVID-19 pandemic resulted in higher care expenses for staffing and special equipment and reduced revenues because some surgeries were suspended, some hospital systems improved their net income with the help of federal Provider Relief funds. Twin Cities hospitals received $493.1 million according to their FY 2020 Medicare cost reports.

 

  • The HealthPartners hospitals, including Regions and Methodist, had the best results in 2020: $190.3 million in net income, or 11% of net patient revenues, up from $174.8 million in 2019. Hennepin Health also increased its net income compared to 2019. However, the M Health Fairview hospitals saw their patient care revenues drop by 6.8% and reported a loss of $40.3 million, The system lost $70 million at Bethesda and Joseph hospitals, which it has since closed. Net income for the Allina Health hospitals in the Twin Cities dropped from $220.8 million in 2018 to $148.8 million in 2019 and only $11.9 million in 2020.

 

  • Inpatient hospital days at Twin Cities hospitals dropped by 10% in 2020. The M Health Fairview hospitals provided 18% fewer inpatient days in 2020. Days declined across all systems and all payers as certain surgeries were suspended and as patient elected not to go to hospitals, even in acute care situations.

 

  • Outstate health systems generally maintained their strong profitability in 2020. As a group, they had net income of $1.47 billion and an average margin of 11.2%, almost as much as in 2019. The Mayo Clinic hospitals had net income of $790 million (21.4% of revenues), with the Rochester hospital reporting net income of $828.9 million. Sanford Health increased its net income by 61.8% in 2020, to $440.2 million in 2020. The Allina Health and M Health Fairview hospitals in this group improved their net income in 2020, but the Essentia Health hospitals in northern Minnesota and CentraCare/Carris Health saw their revenues and net income drop.

 

  • Enrollment in Medicaid HMO enrollment increased 8.2% in first three quarters of 2021, after growing by 18.5% in 2020. UCare and Blue Plus added most of the 83,000 new enrollees. The market share of these plans is likely to shift in the next two years, as the state implements new contracts for Medicaid managed care in both the Twin Cities and outstate Minnesota. UnitedHealthcare will have a contract in the Twin Cities area for the first time. These Medicaid contracts are worth billions and competition for them is aggressive.

 

  • Minnesota health plans saw their medical expenses increase and profits decrease in the first nine months of 2021. In 2020, medical loss ratios had dropped sharply as fewer patient received services. In 2021, utilization and medical expenses began to return to pre-pandemic levels, resulting in lower, though still strong, profit margins.

 

This is the 32nd year that we have published Minnesota Health Market Review. Part One of the 2022 edition is scheduled for release in June. The Part One report will examine 2021 data on the enrollment trends and financial results of Minnesota health plans, including a fuller analysis of the impacts of the COVID-19 pandemic. Excerpts from the report and subscription information can be found at AllanBaumgarten.com

 

June 17, 2021                                                                                                             Contact:      Allan Baumgarten, 952/212-8589

 

Minnesota Health Market Review 2021 finds:

COVID-19 pandemic drives higher profits for health plans,

increases in Medicaid managed care enrollment

 

            (Minneapolis-St. Paul) Minnesota health plans increased their enrollment and more than lower claims for surgeries and other primary and acute care. Six health plans enjoyed an unexpected windfall when they received payments of more than $380 million under the Affordable Care Act Risk Corridor program.

 

            These and other findings are reported in Part One of Minnesota Health Market Review 2021, released today by Allan Baumgarten. This is the 32nd edition of the report, which analyzes key trends and competitive strategies for payer and provider organization in Minnesota’s health care markets. Part Two of the Minnesota report, to be released later this year, will present his analysis of the state’s provider systems and their strategies, financial performance and measures of inpatient utilization. The new report finds that:

 

  • Minnesota HMOs and County-Based Purchasing plans improved their net income from a net loss of $70.4 million in 2019 to positive net income of $272.3 million in 2020. Medica Health Plans was the most profitable HMO, with net income of $77.5 million and a margin of 6.8%, while Medica Insurance Company had net income of $257.3 million, based on its operations in nine states.
  • Medicaid and public programs were once again the most profitable line of business here. HMOs and County-Based Purchasing plans reported underwriting income (before investment revenues and income taxes) of $178.4 million on their state public programs in 2020. That was up from an underwriting loss of $129 million in 2019. The seven plans participating in the Minnesota Senior Health Options program (for persons receiving both Medicaid and Medicare) had underwriting income of $115 million from the program in 2020, up from $82.3 million in 2019.
  • Blue Cross Blue Shield received $249.7 million from the ACA risk corridor to compensate for losses on its individual plans between 2014 and 2016. Five other Minnesota companies split about $130 million in risk corridor payments, although two, Blue Cross Blue Shield and UCare, gave up part of their payment in exchange for an advance payment from investment funds.
  • Enrollment in HMOs and County-Based Purchasing plans increased by 11.6% in 2020, with Medicaid and other public programs adding nearly 170,000 net new members. UCare alone added more than 81,000 new enrollees in Medicaid, Medicare Advantage and individual plans. Minnesota is going through several procurement processes for Medicaid and other public program in 2021 and 2022, and these contracts represent billions in potential revenues for health plans.
  • Medicare health plans added about 52,000 members between January 2020 and 2021. UCare added about 12,000 to its HMOs and Blue Cross Blue Shield added about 16,000, mostly in PPO plans. Humana lost about 10,000 Medicare enrollees, partly because some major providers chose not to participate in its networks.
  • Enrollment continued to grow in individual and Medicaid plans in the first quarter of 2021. Individual plans added about 12,000 enrollees in the most recent open enrollment, while Medicaid added 27,000 new members in managed care 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 2021 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: Baumg010@umn.edu

 

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 a number of clients and has completed three studies of health plan and provider system strategies for the Robert Wood Johnson Foundation. More information about those projects is available at his website.

 

Data Set Summary
Report Contents

Part One
Introduction    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
 . .
 . . 3
Market Structure      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 

Health Plan Companies     .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . . . . . . . . .4
Network Arrangements and Provider Systems     .  .                                    .  .  .  .  .  .  . . . . . . 7
Trend Review       . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 
Health Plan Enrollment   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . . . .  . . . . . . . 8
Individual Markets and MNsure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
State Healthcare Programs .  .  .  .  .  .  .  ..  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   .  . . . . . . . . . . 11
Medicare Health Plans  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   .  .  ..  . 13
Health Plan Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . . . . . . . . . . . . . . . . . 14
Financial Results by Line of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Administrative Expenses  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .       21
Health Plan Capital. . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   23
A Look Ahead             . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25



Part Two
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 

Hospitals and Provider Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 

Twin Cities Area Hospitals and Systems............................................................9
Revenues and Net Income .  .  .  .  .  ..  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . . . 10
Occupancy and Payer Mix .  .  .  ..  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . . . .12
Performance Bonuses and Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Outstate Systems and Hospitals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .  14
Revenues and Net Income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Occupancy and Payer Mix .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . .    .  .  .  . . . . ..17
Performance Bonuses and Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Health Plan Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . . . . 21
 Enrollment by Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
Utilization and Effectiveness of Care and Enrollee Satisfaction .  .  .  .  .  .  .  .  . . . . . .23
A Look Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . . . . . .  . . 27

Media Coverage/Presentations
Minnesota Health Market Review 2018, Part One, released June 8: "Minnesota Health Plans Regain Profitability, Add Enrollees; New Competition Stirs for Medicare Health Plans"
  • Christopher Snowbeck wrote in the Minneapolis StarTribune: "Health Insurers Return to Profitability in Minnesota" Click here to view
  • Paul Demko wrote in Politico: "Massive financial improvement for Minnesota health plans last year." Click here to view.
  • Chistopher Snowbeck wrote in the Minneapolis StarTribune: "Health plans lost less on Medicaid last year." Click here to view
Minnesota Health Market Review 2017, Part Two, released March 27: "Net Income for Twin Cities Hospitals Drops by 19%; Health Systems Continue Growth, Consolidation and Partnership Strategies; Minnesota HMOs Regain Profits and Increase Enrollment by 8% in 2017"
  • 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 2017, Part One, released June 9: "Minnesota Health Plans Go From Record Profits to Large Losses; Health Systems Push Ahead With Health Plan Strategies"
  • Christopher Snowbeck wrote in the Minneapolis StarTribune: "Operating Losses Swamp Investment Gains at Health Plans in Minnesota" Click here to view​​
Minnesota Health Market Review 2016, Part Two, released April 10: "Outstate Health Systems Increase Profits by 15%; Medicaid Covers More Hospital Days"
  • 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