Detroit-area hospitals lost revenue and patients in 2013, even as hospitals in other parts of Michigan saw profitability improve, according to a report released Monday.
The report, Michigan Health Market Review 2014, found that revenues and net income for Detroit-area hospitals dropped in 2013 for the second year in a row. The report was authored by Allan Baumgarten, an independent health care analyst based in Minnesota.
Detroit-area hospitals had a net income of $286.1 million in 2013, down from $367.9 million in 2012. The St. John-Providence hospitals had the biggest improvement in financial results and posted an average margin of 6 percent. Detroit Medical Center hospitals, which had reported steadily improving profits from 2009 to 2012, only broke even in 2013.
Baumgarten said decreased income is due in part to a decline in inpatient hospital days. It’s the sixth year in a row that inpatient hospital days have declined in the Metro Detroit area. He blamed Metro Detroit’s declining population, combined with pressure on hospitals from insurers and the Affordable Care Act (ACA) to reduce re-admissions.
“Both insurance companies and provider organizations were feeling pressure from employers and Medicare to move away from a system that rewarded you with more compensation if you just did more lab tests or procedures, or kept more patients in the hospital for more days,” Baumgarten said. “The ACA just crystallized those and created mechanisms to accelerate that process.”
There has also been a shift to high deductible health insurance plans, which discourage consumers from utilizing health care services, Baumgarten noted.
“People are really thinking hard about whether they really need some of these procedures,” Baumgarten said. “They’re looking more carefully at how they want to access care and whether they need to have, or want to have, certain medical procedures.”