Henry Ford Health System went from an eight-figure deficit in the first quarter last year to an eight-figure surplus this year. The Detroit-based integrated system recorded higher inpatient and outpatient volumes, and also got past the instability of its electronic health-record rollout.
Henry Ford has been on the bleeding edge the past several years, sitting in a fragmented Detroit healthcare market. The system underwent a massive turnaround in the early 2000s under the tutelage of Nancy Schlichting. But it has barely been above break-even the past two years, and it endured a botched merger with Beaumont Health System. Schlichting is retiring from her CEO role this December, giving way to Wright Lassiter III.
Much of the financial uncertainty stemmed from Detroit's challenging market and the role Henry Ford has played as the area's safety net provider. In addition, Henry Ford completed the installation of its Epic Systems Corp. EHR system at its hospitals and doctor sites in early 2014, which created “substantial one-time expense as well as some short-term adverse revenue implications,” officials said. The EHR rollout was a primary reason Moody's Investors Service downgraded Henry Ford's credit rating last summer.
The EHR system is now past the initial cost barriers, more patients are visiting Henry Ford facilities and the organization's health insurance plan is continuing to grow at a high rate. Those factors led to Henry Ford's $21.1 million surplus in the first quarter of 2015, compared with a $16 million loss in the same period of 2014.
Total revenue increased 7% to $1.2 billion in the quarter. Almost half of that—$586 million—came from premiums collected by Henry Ford's health insurance arm, Health Alliance Plan.
HAP has more than 694,000 members, most of whom are employees at automobile companies, Medicare Advantage enrollees or Medicaid beneficiaries. Most of HAP's growth in the first quarter came from self-insured employers and low-income adults who gained Medicaid coverage under the Affordable Care Act.
Henry Ford's inpatient admissions and outpatient volumes each grew 3% year over year. The increased hospitalizations were a reversal from last year when fewer patients were admitted to Henry Ford's five hospitals.
Higher volumes and more insured patients did not quell the amount of uncompensated care Henry Ford provided in the first three months of 2015. Uncompensated care rose 12.5% to $81 million because in large part to the rise of health plans that place more out-of-pocket spending on patients.
“There remains a large number of uninsured individuals, and many patients are finding that they now have insurance coverage with deductibles and copayments that are beyond their ability to pay,” Henry Ford executives said.