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                                                                                                            Tuesday, March 9, 2021

 

RELEASE

 

Texas Health Market Review 2020 finds:

Texas Health Insurers Reap Strong Profits in First Nine Months of 2020;

Hospitals Continue Consolidation and Profitability

 

      Houston – Austin - Dallas/Fort Worth – Texas insurers reported much improved profits in the first nine months of 2020 as expenses for COVID-19 patients were more than offset by lower claims for non-emergent surgeries that were suspended for several months. Most hospitals here saw their profitability increase between 2017 and 2019, even though the number of Texans without insurance has grown in the last two years.

      These and other findings are reported in Texas Health Market Review 2020, Allan Baumgarten’s new analysis of insurers and hospital systems in the Texas health care market. This is the 16th edition of the report, first published in 1998. The report analyzes strategies and competition for health insurers and provider systems in Texas and discusses early measures of the impact of the COVID-19 pandemic. Baumgarten is an independent analyst, based in Minneapolis, who currently publishes state health market reports in Texas and five other states and conducts project research, such as recent reports on provider-sponsored health plans and Medicaid managed care for the Robert Wood Johnson Foundation.

      The new report finds:

*    Medical loss ratios for Texas health insurers fell between 2019 and 2020, leading to much stronger profit margins in the first nine months of 2020. Texas HMOs had average medical loss ratios of 81.6% in the first nine months of 2020, five full percentage points less than the same period in 2019. Their average profit margins grew 159% from 2.8% in 2019 to 6.5% in 2020. For example, HMO Blue Texas, part of Blue Cross Blue Shield of Texas, increased its net income from $432.5 million in the first nine months of 2019 to $1.078 billion in 2020.

  • Profitability increased for most Texas hospital systems between 2017 and 2019. In Houston, pre-tax net income for hospitals increased by 45.6% from $1.827 billion in 2017 to $2.629 million in 2019. The HCA Healthcare hospitals in the region had net income of $543.8 million in 2019, or 17.2% of net patient revenues. In the Dallas-Fort Worth area, hospitals had pre-tax net income of $3.144 billion in 2019, up 23.8% from $2.54 billion in 2017. Baylor Scott and White’s hospitals, the largest system in North Texas, reported average margins of 16.3%, while the HCA Medical City hospitals had pre-tax margins of 26.2% in 2019.
  • Although the major systems continue to invest in new facilities, growth of inpatient utilization has slowed. Inpatient hospital days increased by only 1.7% for Dallas-Fort Worth hospitals between 2017 and 2019. Seeking to expand their geographic reach while conserving capital, health systems have increased their investments in micro-hospitals, free-standing emergency departments, ambulatory surgery centers and urgent care clinics. In the San Antonio area, the HCA Methodist system has developed six free-standing emergency departments, while the Tenet Baptist Health system has eight emergency hospitals.
  • After declining in 2019, enrollment in Medicaid HMOs increased by 15% in the first nine months of 2020. As a result of the economic downturn last spring and suspension of eligibility verification, enrollment in Medicaid and CHIP in Texas increased from 4.2 million to 4.6 million. AmeriGroup, the largest Medicaid HMO, added 105,000 Medicaid enrollees in the first nine months of 2020.
  • Enrollment in Medicare Advantage plans has grown steadily and profitably, and penetration here is higher than the national average. Enrollment in Medicare Advantage plans grew to 1.756 million in 2020, and 41.2% of Medicare beneficiaries are in a private health plan here, more than the national average of 39%. The UnitedHealth Group HMOs have the largest Medicare Advantage enrollment while Humana companies have the most PPO enrollees. Medicare Advantage plans had underwriting income of $408.8 million in 2019, up from $259.6 million in 2017.
  • In 2019, Texas HMOs reported net income of $645.4 million, or 1.6% of underwriting revenues. HMO Blue Texas had net income of $300.9 million or 9.4% of underwriting revenues, and Molina Healthcare and the WellCare/SelectCare Medicare plans were also very profitable.  
  • Enrollment in individual plans increased again in 2020, passing 1 million. Centene, operating here as Ambetter/Superior, is the largest seller of individual plans, with about 338,000 enrollees, followed by HMO Blue Texas.

 

      Information about subscriptions to Texas Health Market Review 2020 can be found at www.AllanBaumgarten.com

 

Monday, December 17, 2018

Texas Health Market Review 2018 finds:

Insurance expansion gains erode and

Texas hospitals and health plans see declining profits in 2017

 

      Houston – Austin - Dallas/Fort Worth – With fewer insured patients, many Texas hospital systems saw their strong recent profits decline in 2017. And while HMO enrollment reached record highs in 2017, Texas HMOs lost money as a group, even on their usually profitable Medicaid plans.

      These and other findings are reported in Texas Health Market Review 2018, Allan Baumgarten’s 15th report analyzing insurers and hospital systems in the Texas health care market. He first published a Texas market analyzes in 1998. The report analyzes strategies and competition for health insurers and provider systems in Texas, examining the impact of the Affordable Care Act and other developments driving changes in the market. Based in Minnesota, Baumgarten is an independent analyst who currently publishes state health market reports in Texas and seven other states and conducts research for organizations such as the Robert Wood Johnson Foundation.

      The new report finds:

  • Profitability declined for many Texas hospital systems. In Houston, pre-tax net income for hospitals was $1.827 billion in 2017, or 8.4% of their net patient revenues. That was down 18.7% from net income of $2.246 billion in 2015, when they posted an average margin of 11.1%. Hospitals have benefited from a growth in insurance coverage in the state, seeing fewer uninsured patients, but the number of uninsured began to grow again in 2017. In the Dallas-Fort Worth area, average hospital margins dropped from 14.1% in 2015 to 12.7% in 2017, as combined net income decreased from $2.597 billion to $2.54 billion. Net income also decreased for Austin-area hospitals, with average margins declining from 16.5% in 2015 to 13% in 2017.
  • Hospital systems remained focused on growth, and are expanding through acquisitions, new construction, partnerships and adding new convenient care sites. The Baylor Scott & White system, already the second largest in the state, proposes to merge with the Memorial Hermann system in Houston, creating the state’s largest hospital system. Hospital systems continue to merge and expand, giving them significant power to demand higher payment rates from insurers. That merger may be the first of non-overlapping systems to get significant scrutiny from antitrust regulators.
  • HCA Healthcare, currently the largest system in the state, rebranded its north Texas hospitals with the name of its very profitable Medical City hospital. Some other systems are shrinking, including Tenet Health, which sold off its Houston and North Texas hospitals. Many systems have added new urgent care clinics and freestanding emergency rooms to expand their geographic reach.
  • Although the major systems continue to invest in new facilities, growth of inpatient utilization has slowed. Inpatient days provided by Houston hospitals have grown less than 1% in the past two years, while hospital days increased by less than 2% for Dallas-Fort Worth hospitals in two years.
  • As a group, Texas HMOs lost $18.2 million in 2017, compared to net income of $432.8 million in 2015. While Medicaid HMOs like Amerigroup and Superior HealthPlan posted strong profits, HMO Blue Texas (part of Blue Cross Blue Shield) lost $109.5 million and Texas Children’s Health Plan lost $40.6 million. The HMOs of UnitedHealthcare, now the largest insurer in the state, had combined net income of only $32.7 million, down from $161.3 million in 2015.
  • Growth of Medicare Advantage HMO plans slowed in 2017 but they remain their most profitable line of business. About 800,000 seniors were in Medicare plans in 2017, up from 765,000 in 2015, and UnitedHealthcare’s HMOs enroll more than a 40% of them. While they remain profitable, underwriting income for Medicare plans dropped from $413.7 million in 2015 to $259.6 million in 2017.
  • Medicaid HMOs lost $193 million in 2017. They reported operating income of $69.1 million in 2015, down from $131.9 million in 2013. Four Medicaid HMOs – Children’s Medical Center Health Plan (Dallas), UnitedHealthcare Community Plan, Texas Children’s Health Plan and HMO Blue Texas – posted large losses, though Amerigroup and Superior HealthPlan maintained their profits.
  • Enrollment in Texas HMOs grew by 3.3% in 2017, reaching 5.5 million, a record high for the state. About 3.1 million Medicaid recipients are now enrolled in HMOs, up from 2.9 million in 2015. Enrollment in HMO individual plans grew from 415,000 after the first open enrollment in 2014 to 883,000 in 2016 but has since dropped to 822,000 in March 2018.
  • While individual enrollment has increased sharply with implementation of the Affordable Care Act, several insurers have dropped out of that market segment. After showing early promise for new competition and low premium increases, only three or four insurers are selling individual plans on the Healthcare.gov exchange in the largest metropolitan areas.

 

 
HMOs at a Glance
Data Set Summary
Report Contents

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

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

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

Hospital Systems    ................................................................................................................ 7

Trend Review................................................................................................. 14

Health Plan Enrollment ......................................................................................................... 14

Individual PLans and HealthcareGov .................................................................................... 17

Medicaid Managed Care and CHIP......................................................................................... 17

Medicare Plans  ........................................................................................................................ 18

Enrollment and Market Share by Region................................................................................. 21

Health Plan Net Income........................................................................................................... 23

Financial Results by Line of Business...................................................................................... 24

Administrative Expenses and Provider Payments.................................................................. 30

HMO Capital ............................................................................................................................ 32

Regional Markets and Hospital Systems....................................................................... 34

Dallas-Fort Worth ..................................................................................................................... 34

Houston...................................................................................................................................... 44

Austin.......................................................................................................................................... 52

San Antonio................................................................................................................................. 56

Other Major Hospitals................................................................................................................ 59

A Look Ahead .......................................................................................................................... 63

Media Coverage/Presentations

Texas Health Market Review 2018 released December 17: "Gains from insurance expansion erode and Texas hospitals and health plans see declining profits in 2017"

  • Mitchell Schnurman reported in the Dallas Morning News: "Profits R Us: Dallas-Fort Worth hospitals keep racking up the big bucks"
  • Will Maddox wrote in D Healthcare Daily: "Report: Texas Hospitals are Becoming Less Profitable"​
  • Data from the report on hospitals and health plans appears in the weekly Economic Snapshot, "Obamacare's Impacts," in the Dallas Morning News

Texas Health Market Review 2016 released December 8: "Texas HMOs add 1 million Medicaid and individual members from 2013 to 2015; Hospitals are strongly profitable but inpatient use is flat; Hospitals pursue strategies of expansion and partnership."

  • Sabiya Rice reported in the Dallas Morning News: "North Texas hospitals earned $15.2 billion in patient revenue in 2014"
  • Matt Goodman wrote in D Healthcare Daily: "DFW Hospitals Continue to Ride High Margins But Will Their Strategies Pay Off?"


Texas Health Market Review 2014 released January 9: "Texas hospital form statewide systems, strategic affiliations; hospital profitability remains very strong, but inpatient use is flat; HMOs gained nearly half a million individual members in 2014."
 

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  • Mary Ann Moser @maroser wrote in the Austin American-Statesman: "HUD gets $50 million for $164 million Lakeway hospital loan; new report shows that Austin-area hospital were slightly more profitable in 2013 than other Texas hospitals"
​2013 Report