Houston Medical Journal June 2017 - Page 22

Medical Journal - Houston Page 22 June 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 percent for outpatient care. With less revenue per service, hospitals with high ANNUAL SURVEY continued from page 15 . . . . . . . . . . . . . . . margins. The Woman’s Hospital of Texas, which had the highest operating margin While researchers have extensively studied the differences in management structure, clinical operations, and organizational purpose among nonprofit and proprietary hospitals, the data in the list show a few basic characteristics that may explain some hospitals’ higher profits. Of the 25 hospitals shown, nine are for-profit, 13 are nonprofit, and three are government owned. For-profit hospitals have the highest median inpatient revenue component and a slightly higher median private payor mix. They also have a median Medicaid mix of 6.8%, compared to 8.7% at nonprofit and government-owned facilities. margin from any single DRG payment if the associated costs of treatment are higher than anticipated. Texas Children’s Hospital, which ranks second, also had a negative operating margin, but different factors could be at inpatient care comprises a much greater share of total revenue at Texas Children’s, the hospital has an unfavorable payor mix compared to most others on the list, with Medicaid representing nearly 20 percent of its reimbursements. The Texas Hospital Association recently reported that the state Medicaid program covers an average of 58 percent of an inpatient episode’s cost, while reaching associated with hospitals classified as for- profit entities. Medicaid exposure can often struggle to make a profit. Inversely, hospitals that treated a higher share of patients with private insurance tended to have better of the 25 hospitals listed in 2016, also had the highest rate of private payors, at 92.7%, compared to the list median of about 65%. Higher operating margins were also 10 HEALTH SYSTEMS WITH THE LARGEST PRESENCE IN THE HOUSTON CBSA Together, the characteristics could explain how for-profit hospitals had a median operating margin of 6.6%, compared to 5.6% at all other institutions on the list. t Source: Definitive Healthcare Note: Net Patient Revenue is for most recently reported fiscal year Rank Health System HQ Location CEO Net Patient Revenue from Hospitals in Houston CBSA Total Net Patient Revenue % Revenue from Hospitals in Houston CBSA Payor Mix: Medicare Payor Mix: Medicaid Payor Mix: Private/Self/Other 1 Memorial Hermann Health System Houston, TX Benjamin Chu, MPH, MACP $4,157,832,847 $4,157,832,847 100% 22% 13% 65% 2 University of Texas System Austin, TX Bill McRaven $3,510,453,583 $4,711,383,268 75% 25% 3% 72% 3 Houston Methodist Houston, TX Marc Boom, MD $2,918,355,962 $2,918,355,962 100% 35% 5% 60% 4 HCA Gulf Coast Division Houston, TX Troy Villarreal $2,009,771,172 $2,671,623,601 75% 24% 6% 70% 5 Texas Children’s Hospital Houston, TX Mark Wallace $1,695,359,229 $1,695,359,229 100% 0% 19% 81% 6 CHI St Lukes Health Houston, TX Michael Covert $1,404,472,199 $1,404,472,199 100% 30% 5%