Report finds Milwaukee-area hospitals earned strongest profits ever

    Milwaukee-area hospitals reported their strongest profits ever in 2013, even as inpatient utilization continued to decline, according to the Wisconsin Health Market Review 2014. Authored by Minneapolis-based independent research consultant Allan Baumgarten, this is his ninth report analyzing Wisconsin’s health care provider and payer markets.

    Among his findings:

    Southeast Wisconsin hospitals had combined net income of $800 million in 2013, or 12.3 percent of net patient revenues of $6.5 billion. This is the highest margin for these hospitals in at least the past 10 years.

    • The previous high margin was 9.7 percent in 2007 and again in 2012.
    • All six systems in the area except for Wheaton Franciscan reported margins of about 10 percent or higher in 2013.
    • Wheaton Franciscan, including All Saints in Racine and United Hospital in Kenosha, had net income of $118.6 million in 2013, or 8.6 percent of net patient revenues.
    • The ProHealth hospitals had the highest margin: 21.1 percent. Their combined net income was $108.1 million, most of which was from Waukesha Memorial Hospital.
    • All of the systems had their highest profits in 2013, except for Children’s Hospitals ($70.7 million), which had its best year in 2009 (approximately $100 million).
    • Aurora Health has consistently posted the highest profits. In 2013, its net income was $308.4 million.

    Even though six new hospitals have been built in the area over the past five years, inpatient hospital days have declined or been flat since 2006, with the exception of 2011.

    • Inpatient days peaked at 1.1 million in 2006 and have decreased by about 87,000 through 2013.
    • Except for the Aurora system, utilization at the six systems either decreased or was flat. For example, inpatient days for the Wheaton Franciscan system dropped from 290,000 to 234,000 days.
    • The Aurora hospitals provided 355,000 inpatient days in 2006 and 380,000 days in 2013, an increase of 7 percent.

    Mergers and acquisitions have created powerful provider systems in both southeast Wisconsin and in other parts of the state.

    • While the Aurora system remains the largest in Wisconsin, St. Louis, Mo.-based Ascension Health, which includes the 22 Columbia-St. Mary’s and Ministry hospitals, is now the second largest system.
    • Smaller systems like Mercy Health and Aspirus continue to expand into other communities and have crossed into nearby states.

    Seven Wisconsin provider systems have formed Accountable Care Organizations (ACOs) for Medicare, and one ACO is among the most successful in the country.

    • These provider systems seek to better coordinate care and improve quality for Medicare enrollees, while saving money. If they succeed, they share in the savings.
    • The Bellin/ThedaCare ACO in the Fox Valley has received $7.6 million in shared savings back from the Medicare program.

    HMO enrollment grew again in 2013, as Medicaid health plans like Children’s Community Health and Molina Healthcare added 145,000 enrollees. Enrollment in Medicaid HMOs, however, dropped by 50,000 in the first half of 2014, as the state tightened eligibility for the program.

    HMOs improved their profitability in 2013, though it still lags behind previous years.

    • HMOs had net income of $73.6 million in 2013, or about 1 percent of underwriting revenues. That is better than 2012 ($54.4 million) but less than the previous five years.
    • Profitability in 2013 was boosted by $82 million in investment revenue, much higher than usual, and improved underwriting profits for the state’s 17 Medicaid HMOs.
    • Blue Cross Blue Shield of Wisconsin (not including its Compcare HMO) had net income of $70 million, a 10.3 percent margin, but less than in 2012.

    As a result of the individual mandate and new subsidies for coverage, enrollment doubled in individual plans sold by Wisconsin HMOs and insurers.

    • Three HMOs–Dean Health in Madison, Security Health Plan in Marshfield and Compcare Health Services in the Milwaukee area–each added between 15,000 and 20,000 new individual enrollees. Additionally, a new health cooperative, Common Ground Healthcare, went from zero to more than 27,000 enrollees in just a few months.

    In addition to Wisconsin, Baumgarten publishes reports on the health markets of 10 other states: Arizona, California, Colorado, Florida, Illinois, Kentucky, Michigan, Minnesota, Ohio and Texas.

    To read more about the Wisconsin Health Market Review 2014’s findings, visit

    Sign up for BizTimes Daily Alerts

    Stay up-to-date on the people, companies and issues that impact business in Milwaukee and Southeast Wisconsin

    No posts to display