MINNESOTA ECONOMY AND HEALTHCARE EXPENDITURES
• Healthcare in general, and hospitals in particular, are a growing proportion of the Minnesota economy.
• Health expenditures more than tripled (205 percent) over 20 years (1997-2016), faster than the overall economy.
• Hospital health expenditures account for the single largest portion of health expenditures.
• Hospital health expenditures grew even faster with growth of 243 percent.
• Minnesota hospitals have done very well financially over the last 20 years. From 1997 through 2016 Minnesota hospitals’ net income totaled $14.3 billion.
RISING HOSPITAL PRICES
• Data from the Bureau of Labor Statistics reveals an almost three-fold increase in both inpatient and outpatient hospital service prices between 1997 and2016.
CHARGE-TO-COST RATIO AND PROFITS IN MINNESOTA
• Minnesota hospitals had an average charge-to-cost ratio (CCR) of 212 percent for 2016. This means that for every $100 in costs to provide care, patients were charged $212. There is wide variation in the CCRs forMinnesota hospitals, ranging from a low of 108 percent to a high of 383 percent.
• The average Minnesota CCR in 1997 was 142 percent compared to 212 percent in 2016, indicating that hospital charges have increased 50 percent faster than costs in the last 20 years.
• The higher the CCR, the higher the net income. For those hospitals in the lowest third of CCRs, the average net income was $968,993. For those hospitals in the highest third of CCRs, the average net income was
• The main characteristics of those hospitals with the highest CCRs include: located in large and
medium-sized urban metropolitan area, the hospitals are larger with more beds and discharges, and the hospitals are members of a hospital system.
• The Minneapolis-St. Paul area has the most hospitals with the highest CCRs.
• Two hospital systems, Allina Health and Fairview Health Services, each have 10 hospitals in the grouping with the highest CCRs. These two systems account for more than half the hospitals with the highest CCRs. Eighty-six percent of hospitals with the highest CCRs are members of systems.
• Over the last 20 years Minnesota hospital markets have become highly concentrated through mergers and acquisitions.