Medicaid Enrollment Drops by Almost 20%
The report examines 2022 data on the financial performance, inpatient utilization and competitive strategies of the hospital systems in the state.
Key findings in the new report:
Revenues for both hospitals and many HMOs in Michigan were boosted during the COVID-19 pandemic by the growth of Medicaid enrollment. There were just under 3 million Medicaid beneficiaries in Michigan in June 2023, about 80% of them in HMOs, but that number is declining as states begin to reverify eligibility of recipients. According to KFF, 687,000 Michigan Medicaid beneficiaries were disenrolled after those reviews as of April 2024. That will have a significant negative impact on the revenues of both Medicaid HMOs and the hospitals, especially those serving a high number of low-income households.
Detroit-Area: 31 General Acute Care Hospitals
Combined net income for these hospitals dropped from $478.8 million in 2020 to $282.7 million in 2021 and to a combined loss of $379.7 million in 2022. Their profit margins fell from 4.0% to 2.1% and a negative 2.7% in 2022. Patient care revenues increased slower than expenses in 2022, and these hospitals saw their patient care losses increase from $387 million in 2021 to $860.2 million in 2022. Further, their other revenues, including investments, philanthropy and government grants, such as the Provider Relief Funds, dropped from $755.6 million in 2021 to $513.9 million in 2022. Hospitals in the area received $132 million in Provider Relief in 2022 and a total of $1.227 billion in 2020 through 2022.
Corewell Health (formerly Beaumont), had a net income of only $11.8 million, down from $194.5 million in 2021. The Henry Ford hospitals reported a loss of $277.6 million in 2022, compared to a loss of $218.5 million in 2021, while the Ascension hospitals here saw their losses grow from $16.3 million in 2021 to $86.9 million in 2022. The McLaren hospitals here lost $23.5 million in 2022, and the Tenet Detroit Medical Center hospitals lost $12 million.
While the number of staffed hospital beds decreased in 2022, the number of inpatient hospital days increased by 1.6% and the average inpatient occupancy rate increased from 68% in 2021 to 70.8% in 2022. However, the number of inpatient days in 2022 was still less than in 2019, before the COVID-19 pandemic. Occupancy was highest at the Henry Ford hospitals and was above 80% at six hospitals. Reflecting the aging population of the area, Medicare, both traditional and Medicare Advantage, covered more than 56% of inpatient days. Medicaid paid for 25.6% of inpatient days, but that was fewer than in 2021. Three hospitals provided 50,000 or more Medicaid-covered days in 2022: Corewell Royal Oak, Henry Ford and St. John.
Other Michigan Hospitals: 67 General Acute Care Hospitals
The publisher analyzed financial and utilization data from 67 hospitals in counties outside of the Detroit area. All but three are members of hospital systems.
After reporting record combined net income of $2.952 billion in 2021, or 13.7% of their net patient revenues, their profits dropped to $307 million in 2022, or only 1.4% of their net patient revenues. They lost $591.5 million on their patient care operations, but had $876.9 million in other revenues, including $258.5 million in Provider Relief Funds. Between 2020 and 2022, these hospitals received Provider Relief Funds totaling $1.357 billion.
The two University of Michigan hospitals had combined net income of $336.8 million in 2022, down from $783.3 million in 2021. The Corewell (former Spectrum Health) hospitals had a net income of $144.5 million in 2022, much less than their net income of $417.7 million in 2021. The Ascension hospitals in this group boosted their net income of $90.6 million in 2021 to $407.6 million in 2022, while the McLaren Health hospitals reported that their net income of $244 million in 2021 turned into a loss of $147.7 million in 2021.
Inpatient days at these hospitals increased by about 134,000 or 3.4% in 2022. On average, inpatient occupancy increased from 63% in 2021 to 66% in 2022. Occupancy rates were above 85% at the University of Michigan, Trinity Ann Arbor, and MyMichigan Midland. Medicare covered 51.7% of inpatient days at these hospitals in 2022. The number of days paid for by Medicaid increased from 630,600 days in 2021 to 670,200 in 2022. Five hospitals provided more than 40,000 days for Medicaid recipients, with Corewell Grand Rapids and the University of Michigan Trinity Ann ArborAnn Arbor providing more than 100,000 days.
Table of Contents
1. Introduction
2. Michigan Hospitals and Health Systems
- Detroit Area Hospitals
- Revenues and Net Income
- Inpatient Occupancy and Payer Mix
- Performance Bonuses and Penalties
- Other Major Michigan Hospitals and Systems
- Revenues and Net Income
- Inpatient Occupancy and Payer Mix
- Performance Bonuses and Penalties
- Health Plan Trends
- Hospital Discharges by HMO and System
- Health Plan Enrollment and Finances in 2021
3. A Look Ahead
Companies Mentioned
- Ascension
- Corewell Health (formerly Beaumont)
- Corewell Royal Oak Hospital
- Henry Ford
- KFF
- McLaren Health
- MyMichigan Midland
- St. John Hospital
- Tenet Detroit Medical Center
- Trinity Ann Arbor Hospital
- University of Michigan
Methodology
The reports analyzing state health care markets are intended to be a resource to health care organizations facing a full range of challenges but also seeking to identify and benefit from opportunities that present themselves.
This report is presented in three main sections. The first part, Market Structure, describes the major health insurers and hospital systems in the state, showing recent entrants and the high-level of consolidation that has occurred in both the health plan and provider markets. Market Trends, the next section, presents our analysis of enrollment trends and financial results for the health insurers. The last section contains our analysis of financial and inpatient utilization data on the hospitals in the state.
The analysis of health plan companies is based on their annual and quarterly statements filed with the Department of Insurance, including forms prescribed by the National Association of Insurance Commissioners and supplemental reports required by the state. The publisher also uses Medicaid data from the Department of State Health Services and Medicare health plan and hospital data from the Centers for Medicare and Medicaid Services. The publisher has that data together with insights that they have gained in interviews with dozens of leaders in health care organizations in the state.
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