Denver-area hospitals made a record $2 billion in profits in 2018, according to a new report

Denver-area hospitals made a record $2 billion in profits in 2018, according to a new report

By John Ingold (September 13th, 2019)

For 25 years, health care analyst Allan Baumgarten has been studying the hospital market in Colorado, and his new report will show something it never has before: Denver-area hospitals surged past the $2 billion mark in profits in 2018.

The 27 metro-area hospitals Baumgarten includes in his report made just over $2 billion in pre-tax profits in 2018, compared with $1.7 billion in 2017 and $1.3 billion in 2016, according to his calculations.

The latest number represents a 19.3% profit margin for the hospitals, as a percent of net patient revenues, and it’s a full percentage point higher than the 18.1% margins hospitals reported in 2017, according to Baumgarten’s findings. The money the hospitals made from patient care increased 9.2% for Denver-area hospitals in 2018, while the hospitals’ cost of treating those patients increased only 4.1%. Inpatient hospital days — a measurement of patient volume — creeped up only about 1%.

“That’s the kind of spread a Wall Street analyst would find very impressive,” Baumgarten said Thursday at a meeting of the Colorado Business Group on Health, where he presented a first-look at his every-other-year report. The final report will be available in the coming weeks.

“That’s not a lot of growth,” he said of the patient volume figure. “That’s not a lot of increased utilization. That suggests to me that it’s not utilization that’s driving increased revenues, it’s the prices.”

Many hospitals outside of the metro area also turned solid — but not record — profits, according to the report. The 28 largest non-metro hospitals collectively made $769 million in pre-tax profits in 2018, down slightly from the $781 million they made in 2017. Their margins also fell, to 13.2% from 14.3%.

In a statement, a spokeswoman for the Colorado Hospital Association said the association had identified “numerous significant errors” in an earlier version of Baumgarten’s data and had concerns about the accuracy of his figures. The spokeswoman, Julie Lonborg, said the association has not received a final report from Baumgarten and could not comment on specifics.

But she confirmed that hospitals saw increased profit overall in 2018.

“This is partially a function of Colorado’s strong economy and a focus on controlling costs as we work on improved affordability,” Lonborg wrote in an email.

Read Full Story at ColoradoSun.com

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