Fewer Colorado residents enroll in HMOs, hospital profits increase

Fewer Colorado residents enrolled in HMO plans in 2005, but Denver-area hospitals "enjoyed their strongest profits in recent memory," according to findings released Friday from the Colorado Managed Care Review 2006, the Denver Post reports.

For the report, Minnesota health care analyst Allan Baumgarten examined financial information from federal cost reports filed by hospitals participating in Medicare among other sources.

The report found that enrollment in HMOs has declined steadily since 2000, including a nearly 10% drop in 2005 to 1.03 million Colorado residents compared with 1.6 million six years ago.

The report attributed the decreased enrollment to employers who have stopped offering insurance or moved from comprehensive HMO plans to PPO plans "and similar products that have thinner benefits and additional enrollee cost-sharing."

Colorado HMOs had net income of $73.6 million in 2005, down from $107.5 million in 2004 and $192.3 million in 2003, the industry's most profitable year. Meanwhile, insurance premiums increased by 10.8% in 2005, higher than the national average of 9.2%.

The report predicted that insurance premium increases could level off as a result of consolidation in the insurance industry and the construction of new hospitals.

Baumgarten noted that five new hospitals have been erected in Denver, which has enabled insurers to better negotiate contracts with hospitals over reimbursement rates.

While employers and consumers paid higher premiums but received reduced benefits, hospitals reported net income of $384 million in 2005, according to the report (Shanley, Denver Post, 11/9).