Healthcare Business News

Presbyterian Healthcare Services sees higher profitability under Medicaid expansion

By Beth Kutscher
Posted: August 25, 2014 - 2:15 pm ET

Presbyterian Healthcare Services, the New Mexico system that has hospital and health plan operations, reported that the state's revamped Medicaid program led to higher profitability in the second quarter of the year.

Albuquerque-based Presbyterian reported that its second-quarter operating margin (PDF) improved to 6.9%, up from 4% during the same period in 2013. In total, the group reported a surplus of $84.6 million on revenue of $621.6 million compared with a surplus of $11 million on revenue of $533.6 million in the prior-year period.

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Presbyterian is one of four health plans that were selected last year to manage medical, long-term care and behavioral health services for Medicaid beneficiaries under the state's revamped Centennial Care program. The redesigned plan—which offers Medicaid services through managed-care organizations—went into effect Jan. 1 and also expanded Medicaid eligibility for low-income adults.

Premium revenue at Presbyterian increased 21.5% in the second quarter, as its at-risk health plan membership increased 6.5% year over year. Although it saw a 1.5% decrease in members in its commercial business, Medicaid beneficiaries increased 10.1% and individual memberships increased 7.1%.

In its eight hospitals, inpatient discharges increased 2.9% year over year while outpatient visits were up 5.3%. Revenue from patient care increased 6.5% in the second quarter compared with the prior-year period.

Some of the volume growth came from health plan members seeking care at its own hospitals, Presbyterian reported, instead of other contracted facilities. The increase came primarily from its three Albuquerque and Rio Rancho hospitals. Its five more rural hospitals saw a 3% decrease in discharges as they struggled with physician recruitment and retention challenges.

Follow Beth Kutscher on Twitter: @MHbkutscher

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