Michigan Managed Care Review 2006

The report finds:

Detroit-area hospitals improved their financial results for the fourth straight year. Based on an analysis of Medicare cost reports, hospitals in the area had net income in $163.2 million in 2005, or 2.0% of revenues. That is up from $64.2 million in 2004, $50.6 million in 2003 and losses of $28.2 million in 2002. Still that is far behind Midwest markets like Milwaukee, where hospitals had average net income of 8.9% of revenues. The largest hospitals in other parts of the state reported average profit margins of 7.3% of patient revenues.Occupancy in area hospitals is relatively high, but the addition of new hospital capacity creates some risk. On average, 71.5% of hospitals beds were full. However, two new hospitals will open at a time when many households are losing employment-provided benefits or facing higher cost-sharing.

Enrollment in Michigan HMOs dropped by about 1.5% in the first half of 2006. Commercial HMO plans continued to lose enrollment, which was partly offset by growth in Medicaid and Medicare HMOs. HMOs posted strong net income for the first half of 2006, though not as strong as in 2005. Michigan HMOs had net income of $89.7 million through June 2006, or 2.3% of revenues. Net income for the comparable period in 2005 was 3.5% of revenues.

A series of sidebars compares Michigan HMOs against their counterparts in California, Colorado, Florida, Illinois, Minnesota, Ohio, Texas and Wisconsin on measures like profitability, premium trend, and use of capitation.