COLORADO

    (Denver, February 6, 2009) Colorado hospitals reported very strong profits in 2007, but face serious risks going forward. And while HMO enrollment continued its eight-year decline, HMO profitability was high, particularly for Medicare Advantage plans.

    Colorado Health Market Review 2008, to be released on Friday, February 6, includes these findings and others. This is the 15th annual edition of Allan Baumgarten's analysis of trends and issues in Colorado's health care markets. Baumgarten is an independent analyst and researcher on health finance in local markets who has published his Colorado market study since 1994. He also publishes annual market reports in Arizona, California, Florida, Illinois, Kentucky, Michigan, Minnesota, Ohio, Texas and Wisconsin.

    In this new report, Baumgarten finds:

• Denver area hospital systems reported very strong profits in 2007.

    Based on his analysis of hospital cost reports submitted to Medicare, hospitals in the Denver area had pre-tax net income of $433.6 million or 8.9% of net patient revenues.  HealthOne/HCA, the largest and most profitable system here, had net income before taxes of $270.7 million in 2007, or 17.8% of net patient revenue. The Centura hospitals in the Denver area had net income of $55 million (6.2%) while the three Exempla hospitals had net income of $58.7 million, or 7.3% of net patient revenues. Of the three new hospitals in the Denver suburbs, HealthOne Sky Ridge and Parker Adventist, had very strong results and Exempla Samaritan posted a small profit for the first time.

    Still, the weakened economy means that fewer people still have comprehensive health benefits, which will likely reduce patient volumes. High deductible plans are creating collection challenges for providers. And low returns on investments plus the high cost of credit, if available, are likely to sharply reduce hospital profits.

• In 2007, Colorado HMOs had net income of $201.6 million, or 5% of revenues

    HMO profits increased by about $30 million compared to 2006, with Medicare Advantage plans accounting for $170 million of pre-tax profits. However, Anthem Blue Cross Blue Shield of Colorado and Nevada saw its net income decline from $108.1 million in 2006 to $61.8 million, or 4.7% of premium revenues.

• Enrollment in Colorado HMOs decreased for the eighth straight year in 2007 and again in the first half of 2008.

    Most of the decline has been in employer groups who have departed HMOs for PPOs and other benefit plans that have higher enrollee cost-sharing through co-payments and deductibles. And some employers have dropped coverage, adding to the number of uninsured here.

•  Average premium revenues from employer groups increased by 7.4% in 2007.

In 2007, HMOs collected an average of $291.16 per commercial member per month, an increase of 7.4% over the 2006 average of $271.11. That is more than the 2006 increase of 2.6%, but less than double digit increases in seven out of the eight previous years. Medical expenses increased by 10.2% in 2007.

    Excerpts from the report, including the popular "Colorado HMOs at a Glance" page can be viewed at http://www.AllanBaumgarten.com. Copies of Colorado Health Market Review 2008 can be ordered from Allan Baumgarten for $130.00. Orders can be placed at his website or by calling 952/925-9121, faxing 952/925-9341 or sending E-mail to: Baumg010@tc.umn.edu

© 2010 Allan Baumgarten. All rights reserved.