For-profit HealthOne hospitals well in black

By Joyzelle Davis, Rocky Mountain News (Contact)

Friday, April 11, 2008

Three of HealthOne HCA's hospitals - Swedish, Sky Ridge and Rose - rank as the Denver area's most profitable, according to a new study.

Overall, hospitals in the Denver area earned $475 million before taxes in 2006, a pretax profit margin of 9 percent on patient revenues of $5.2 billion, the Colorado Managed Care Review said. Swedish again ranked as the most profitable facility in the area, with net income of $90.6 million for a pretax margin of 26 percent.

The report also found that Colorado Health Maintenance Organizations had net income of $171.9 million in 2006, 4.6 percent of premium revenues and more than twice as much as in 2005. That comes even as Colorado HMO enrollment continues its six-year slide, dropping below 1 million for the first time since 1995.

"Hospitals often complain of wafer-thin margins," said Allan Baumgarten, whose annual Managed Care Review studies 11 states, including Colorado. "I would say that's a pretty tasty wafer."

Three of the region's 22 hospitals lost money, according to the report. Centura's Avista hospital in Louisville posted the biggest loss - $2.46 million for a pretax margin of minus 3.4 percent.

The information is taken from reports filed by hospitals with the Centers for Medicare and Medicaid Services, the federal agency overseeing government- run health programs. The report calculates net patient and other revenue, minus total expenses, before taxes.

The cost reports to Medicare slightly overstate profit margins by excluding some of the hospitals' expenses, but Baumgarten's report "overall is in line with what we're seeing," said Rick Haugh, spokesman for the Colorado Hospital Association.

The association doesn't examine individual hospital financial information. On an aggregate basis, Denver-area hospitals have an operating margin of about 7.5 percent, Haugh said. Based on patient services alone - excluding investment income and outside services like cafeterias - hospitals in the area have a margin of minus 0.41 percent, which shows "how much hospitals have come to rely on investment income to shore up their ability to provide care," he said.

HCA HealthOne is the only for-profit system in the Denver area. Spokeswoman Linda Kanamine pointed out that HCA HealthOne hospitals hand over half of their earnings to the nonprofit Colorado Health Foundation.

Kanamine attributed the profitability to the system's lean administrative operations and bargaining clout to pay less for supplies.

davisj@RockyMountainNews.com or 303-954-2514

Earnings tally

Revenue and income for Denver-area hospitals, 2006

* MOST PROFITABLE

Hospital Net income Pretax profit margin

Swedish $90.6 million 26%

Sky Ridge* $48.3 million 23%

Rose $33.2 million 16%

* LEAST PROFITABLE

Hospital Net loss Pre tax profit margin

Centura Avista -$2.46 million -3.4%

University Hospital -$13.3 million -2.5%

Exempla Samaritan -$4.23 million -2.4%

• April 17, 2008

  6:47 a.m.

  Suggest removal

  italiaboy9 writes:

  So the next time I hear that hospitals can't take in the poor and non-insured, should I feel bad for them? Maybe this is socialist of me but when there are millions of people who can't afford any type of healthcare and yet the hospitals are making tidy profits...isn't there something wrong here?? I'm really in a quandary these days because I do support capitalism and I do believe that strong corporations with healthy profits bring jobs and prosperity to America. HOw come I'm just not seeing that these days? Why do I continue to see manufacturing go overseas and jobs being outsourced to India, and yet...these profits continue to soar and CEOs are taking home millions upon millions of dollars. I remember back in the early 90s the CEO at the bank I worked for made about 250K a year. Today, I'm sure he'd be making millions whereas the disparity between his pay and the people that actually keep the bank afloat gets ever wider. I'm amazed to see how things have changed so drastically in just 15 years. Where has America gone? (Oh yeh, to China...I keep forgetting)