Denver’s for-profit hospitals – such as HealthOne’s Medical Center of Aurora – squeeze twice as much income from their revenues as Centura Health and other not-for-profit competitors, according to financial information the hospital chains provided Medicare in 2004.
While the city’s three major hospital systems net roughly the same amount each day, per patient – between $3,671 and $3,878 last year – HealthOne’s six hospitals were able to treat patients for far less, earning the company an operating margin of 26 percent, based on figures released today in the Colorado Managed Care Review 2005.
“A lot of what drives this is mission,” said Terry Peltes, chief executive for Denver- based Certus Corp., a health- care consulting firm. “One’s is to maximize profit; the other’s is to serve the community.”
HealthOne spokeswoman Linda Kanamine said the analysis overestimates profits because it does not take into account taxes, debt and other costs. She declined to provide alternative figures.
“We operate in a very competitive market, and our services must remain competitively priced,” Kanamine said.
HealthOne is owned by Nashville, Tenn.-based HCA Inc.
Public teaching hospitals, by comparison, where doctors perform experimental procedures using the latest in medical technology, spend more to treat each patient: $5,314 on average per day, according to the report.
Teaching hospitals – including Denver Health Medical Center, University of Colorado Hospital and Children’s Hospital – operate on slimmer margins, an average of 3 percent, according to the report.
For-profit hospitals wring extra millions from tight health-care dollars because they trace every penny and cut what’s not needed, like extra nurses, Peltes said.
Generally, quality of care doesn’t differ much between for-profit and nonprofit hospitals, he said.
“It’s just a different view,” Peltes said.
HealthOne, which operates as a 50-50 joint venture between for-profit HCA and nonprofit HealthOne Alliance, reported net income before taxes of $253.7 million in 2004, almost five times that of its biggest competitor, Centura Health, according to the report. The Colorado Managed Care Review is compiled by Minnesota health-care analyst Allan Baumgarten, who uses financial information from federal cost reports that hospitals participating in Medicare must file.
The cost reports offer a glimpse of the internal operations of Denver hospitals but aren’t enough to capture the entire financial picture, said Peter Freytag, chief financial officer for the Colorado Health and Hospital Association.
For Baumgarten, the numbers point clearly to one fact: Denver’s hospitals are powerful and profitable.
“Hospitals have largely been able to set the prices they are going to charge,” said Baumgarten.
Health plans trying to pass on costs “have run into some serious resistance from employers. … And patients are paying a bigger percentage of every visit, every prescription,” he said.
Staff writer Marsha Austin can be reached at 303-820-1242 or maustin@denverpost.com.
