Minnesota Health Market Review 2018 (Part 2): Net Income for Twin Cities Hospitals Increases by 35% - ResearchAndMarkets.com

DUBLIN--()--The "Minnesota Health Market Review 2018, Part Two" report has been added to ResearchAndMarkets.com's offering.

After a series of recent mergers and acquisitions, the three largest hospital systems in the Twin Cities now control 71% of the market. Although their operating losses grew in 2017, Twin Cities area hospitals increased their net income by 35%. Out state hospitals also continued their strong profitability, posting an average margin of 10.9%. Minnesota HMOs added 35,000 enrollees and reported an average margin of 3% in the first nine months of 2018.

Using data from Medicare cost reports and other sources, financial performance and inpatient utilization for 31 Twin Cities area hospitals (including four in western Wisconsin) and 50 hospitals serving communities in outstate Minnesota were analyzed.

The analysis focuses on the major integrated delivery systems in the region: Fairview, Allina and HealthPartners in the Twin Cities and Mayo, Essentia and Sanford Health in outstate Minnesota.

Key Findings

  • Health systems continue to grow through new construction, mergers and acquisitions and addition of new convenient care sites, like urgent care and retail clinics or free-standing emergency rooms. The three largest systems in the Twin Cities - Fairview, Allina and HealthPartners, now control 70.7% of the market, up from 57.7% in 2012. The combined Fairview system has more than 30% of the Twin Cities market, the first time a system has reached that threshold. In western Wisconsin, the Gundersen and Marshfield Clinic systems plan to merge, creating a formidable competitor for systems like Mayo and HealthPartners.
  • Despite posting operating losses of $237 million, net income for Twin Cities-area hospitals increased by 35% in 2017. Twin Cities hospitals reported net income of $599.6 million (5.9% of net patient revenues) in 2017, up from $444 million in 2016 and $548 million in 2015. Their other revenues from investments, philanthropy and government grants increased sharply, more than offsetting their operating losses. Ten hospitals in the regions reported margins above 10%. The Fairview Health system, now including the four HealthEast hospitals, improved its net income from $138.2 million to $206.4 million, while the Allina hospitals in the Twin Cities improved their average margin from 3% to 7.4%. The HealthPartners hospitals, especially Methodist, enjoyed higher net income for the second straight year, growing from $102.1 million in 2016 to $136.1 million in 2017.
  • Inpatient hospital days decreased for Twin Cities hospitals, the sixth time in the past 10 years. They provided 1.46 million inpatient days, about 450 less than in 2016 and 65,000 less than in 2008. On average, 70.7% of beds were occupied in 2017, up from 69.2% in 2015, but less than 74.5% in 2008. Government programs - Medicare and Medicaid - now cover 68% of inpatient days for these hospitals. That has improved their revenues and reduced their uninsured patient admissions but makes them especially vulnerable to proposed reductions in government funding.
  • In outstate Minnesota, hospitals improved their net income from $1.013 billion in 2016 to $1.298 billion in 2017, and their average margins grew from 8.9%to 10.9%. The Mayo Clinic hospitals in the state improved their net income from $528.1 million in 2016 to $671.8 $272hospitals declined from 12.5% in 2016 to 11%. CentraCare, which added Rice Memorial hospital in 2018, improved its net income from $14.2 million to $177.3 million. The average margin for the Essential hospitals increased from 2.9% to 8.5%.
  • Many Minnesota provider systems participate in Accountable Care or shared savings arrangements with Medicare and Medicaid. However, some systems have struggled to succeed in those arrangements, and Allina and Fairview dropped out of the Medicare Next Generation ACO program.
  • Blue Plus was the most profitable HMO, with net income of $130.1 million and a margin of 7% in the first nine months of 2018. Medica Insurance Company, now selling individual, group or Medicare plans in 10 states, had a net income of $272.4 million during that period and a margin of 10.3.%

Key Topics Covered

1. Introduction

2. Hospitals and Provider Systems

3. Twin Cities Area Hospitals and Systems

  • Revenues and Net Income
  • Occupancy and Payer Mix
  • Performance Bonuses and Penalties

4. Outstate Systems and Hospitals

  • Revenues and Net Income
  • Occupancy and Payer Mix
  • Performance Bonuses and Penalties

5. Health Plan Trends

  • Enrollment by Region
  • Utilization and Effectiveness of Care and Enrollee Satisfaction

6. A Look Ahead

Companies Mentioned

  • Allina
  • Blue Plus
  • CentraCare
  • Essentia
  • Fairview
  • HealthPartners
  • Mayo
  • Medica Insurance Company
  • Rice Memorial Hospital
  • Sanford Health
  • The Gundersen & Marshfield Clinic

For more information about this report visit https://www.researchandmarkets.com/r/y4sshq

Contacts

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Related Topics: Healthcare Services

Contacts

ResearchAndMarkets.com
Laura Wood, Senior Press Manager
press@researchandmarkets.com
For E.S.T Office Hours Call 1-917-300-0470
For U.S./CAN Toll Free Call 1-800-526-8630
For GMT Office Hours Call +353-1-416-8900
Related Topics: Healthcare Services