Ohio

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Reports

November 20, 2020

Ohio Health Market Review 2020 finds:

Health insurers profit from reduced utilization and claims;

Hospital profitability grows in three largest metropolitan areas

 

      Cincinnati/Dayton/Columbus/Cleveland –Ohio health insurers saw reduced claims and improved profits in the first half of 2020 but face significant changes in Medicaid managed care, their largest line of business. Based on 2019 data, hospital systems across the state enjoyed stronger profitability and continue to pursue growth through new construction and acquisitions.

      These are some of the key findings in Ohio Health Market Review 2020, Allan Baumgarten’s 15th report analyzing the health care insurance and provider markets in Ohio. The report describes key trends for those organizations and analyzes their competitive strategies. Baumgarten is an independent analyst based in Minnesota who currently publishes market reports in Ohio (since 1997) and five other states and conducts market research for a range of clients.

      In the new report, Baumgarten finds:

  • Medicaid HMOs in Ohio saw a sharp reduction in medical claims in the first half of 2020 and much improved profits. Five HMOs contracting with the state for Medicaid reported that their net income in the first half of 2020 was $334 million compared to a loss of $48 million for the same period in 2019. As claims dropped, their average medical loss ratio dropped from 87.9% in 2019 to 81.9% in 2020. Medicaid is the largest line of business for Ohio health plans and enrolled 2.3 million persons at the end of 2019. Medicaid HMOs added 210,000 members in the first half of 2020, as people who lost their jobs and health insurance turned to the program for coverage.
  • Ohio Medicaid is making major changes in how it contracts with and pays managed care plans. In 2019, Ohio paid about $17 billion to Medicaid HMOs, making it a huge business opportunity. It recently launched a process to select contractors for the program beginning in 2022. The new contracts will focus on population health, reduce the role (and revenues) of the HMOs in plan administration and enable the state to more closely manage market share. CareSource, the biggest Medicaid HMO in Ohio, has been pursuing opportunities to contract for Medicaid managed care outside of Ohio, and its for-profit management company has received private equity investments to provide the capital needed to pursue that expansion.
  • Hospital profitability in 2019 increased in all three major metropolitan areas and increased by 31% in the Columbus region. Based on data from Medicare hospital cost reports, the hospitals in the Columbus area had combined 2019 net income of $1.558 billion, or 15.4% of their net patient revenues. That was 31% more than their combined net income of $1.187 billion in 2018. Nationwide Children’s had net income in 2019 of $595.3 million, or 34.7% of net patient revenues. The OhioHealth hospitals had net income of $565.9 million (15.8%) and the Ohio State University hospitals had net income of $344.4 million (9.5% of revenues). Hospitals in the Cincinnati/Northern Kentucky/Dayton region had combined net income of $1.309 billion in 2019 (11.4% of net patient revenues), up from $791.6 million in 2018. Premier Health, having closed Good Samaritan Hospital in Dayton in 2018, was the most profitable system, while Cincinnati Children’s, Christ and the Kettering Health Network hospitals reported the strongest net income.
  • In the Cleveland/Akron region, hospitals posted combined net income in 2019 of $1.942 billion, or 12.6% of net patient revenues, up from $622 million in 2018. The Cleveland Clinic hospitals had net income of $1.629 billion (19.9% of revenues), while the University Hospitals system had net income of $299.7 million (8.3% of net patient revenues).
  • Inpatient days decreased again for hospitals in the Cincinnati and Cleveland areas, but increased in the Columbus area. Ohio hospitals continue to pursue growth strategies, spending billion on new facilities, both inpatient and ambulatory centers. They also have pursued mergers and acquisitions, with some deals going beyond the borders of the state.
  • Ohio HMOs reported 2019 net income of $282.1 million, or 1.3% of underwriting revenues, less than in 2018. The state’s six Medicaid health plans posted combined underwriting income of $119.4million in 2019, or 0.7% of revenues, less than in 2017. Of the Medicaid HMOs, Aetna Better Health had the strongest margin in 2019 (8.0%), followed by Molina Healthcare (2.8%) and Buckeye Community (2.1%). CareSource, the largest health insurer in the state, lost $1.9 million on its Medicaid plans in 2019, but made $27.9 million on its individual plans.

      In 2019, Anthem Blue Cross Blue Shield had after-tax net income of $352.2million, or 5.9% of revenues, while Medical Mutual had net income of $102.8 million, or 3.7%.

      Excerpts from Ohio Health Market Review 2020, including the popular “Ohio HMOs at a Glance” exhibit can be viewed at https://allanbaumgarten.com/ohio/  Copies of the report, published in interactive PDF format, can be ordered for $160.00 at the website. E-mail: Baumg010@umn.edu

 

HMOs at a Glance
Data Set Summary
Report Contents

Introduction        .......................................................................................................................... 3

Market Structure   ....................................................................................................................... 4

Health Plans ................................................................................................................................ 4

Provider Systems.......................................................................................................................... 7

Trend Review          ....................................................................................................................... 11

HMO Enrollment ......................................................................................................................... 11

Medicare Plans............................................................................................................................. 14

Medicaid Managed Care .............................................................................................................. 15

Net Income ................................................................................................................................... 17

HMO Financials by Line of Business  .......................................................................................... 19

Provider Payments and Administrative Expenses ....................................................................... 22

Health Plan Capital and Surplus ................................................................................................. 23

Hospital Systems and Regional Submarkets  ............................................................................ 25

Cincinnati-Northern Kentucky- Dayton .................................................................................... 27

Cleveland-Akron  ........................................................................................................................ 30

Columbus ................................................................................................................................... 34

Other Major Hospitals................................................................................................................ 40

A Look Ahead.............................................................................................................................. 45

Media Coverage/Presentations

Ohio Health Market Review 2018  released August 21:  "Ohio hospital report strong profits, especially in Columbus area; health insurers gain enrollees and Medicaid plans are strongly profitable"

  • Barrett Brunsman wrote in the Cincinnati Business Courier: "Income surges for Great Cincinnati hospitals." Click here to read
  • Anna Saker wrote in the Cincinnati Enquirer: "Fewer people in Cincinnati hospitals for 2016, yet revenues role 18%, study shows." Click here to read

Ohio Health Market Review 2015  released January 14:  "Consolidated hospital systems pursue expanded networks, maintain profits even with fewer inpatient days; highly profitable Medicaid enrollment surges"