For 10th Consecutive Year, HFHS Reports Financial Growth

April 25, 2013

DETROIT - For the 10th consecutive year, Henry Ford Health System experienced positive revenue growth and net income in 2012.

Henry Ford reported total revenues of $4.46 billion in 2012, an increase of $490 million from the $3.97 billion total revenues in 2011. Overall, Henry Ford reported $53.1 million net income for 2012, as compared to $62.9 million in 2011, a decrease of 15 percent.

“The net income decrease is related to two factors. The first is an increase in uncompensated care in 2012 for the health system,” says James Connelly, chief financial officer of Henry Ford Health System.

In 2012, the health care system provided $233.6 million in uncompensated care, an 11 percent increase from 2011. This consists of $61 million in charity care, $90 million in unpaid costs of Medicaid and other public programs, and $82 million in bad debt.          

“Second, Henry Ford is making a significant investment in state-of-the-art information technology in our clinical, business and insurance operations, which positions us well for health care reform,” says Connelly.

“This consists of a $356-million investment in our new clinical information and revenue system, which includes Epic, our new electronic medical record. This investment represents a true transformation in the way Henry Ford delivers care to our patients and how we operate our business.”

The Epic impact in 2011-2012 was $41.4 million of additional expense.  In 2011, the Epic expense was $5 million (project started in Nov. 2011) and in 2012 the expense was $36.4 million for the year.

There also was substantial growth within the health system in 2012. 

In its insurance operations, Health Alliance Plan (HAP) and its subsidiaries increased total enrollment to 668,000, an increase of 202,000 members (43 percent) from Jan. 2010 to Jan. 2013. HAP’s current membership is the highest in its history, making HAP the second largest health insurer in Michigan.

Also, Midwest Health Plan, a Medicaid HMO acquired by HAP in 2011, has grown to more than 80,000 members with annual revenue of $275 million.

In October, Henry Ford and Beaumont health systems signed a letter of intent to combine their operations into a new $6.4 billion organization with the goal of designing a national model for health care.

“While we experienced growth in 2012, one of the biggest accomplishments was the talks that led us to announce our intent to merge with Beaumont Health System,” says Nancy Schlichting, chief executive officer, Henry Ford Health System.

“We are looking to the future as we continue our nationally recognized industry leadership in the face of the changing health care environment and its challenges. These include declining health care reimbursement, the growing importance of population health management and the shift toward outpatient services,” adds Schlichting.

Major accomplishments by the health system in 2012 include:

• Henry Ford was recognized nationally as the No.1 hospital system in the country by DiversityInc. for the third consecutive year.
• Enhanced employee health and wellness through the Health Engagement program. For 2012, more than 80 percent of eligible employees and their spouses/same-sex domestic partners qualified for the Enhanced Plan of HAP’s Health Engagement insurance program.
• Henry Ford Health Center Brownstown received Press Ganey’s Summit Award for outpatient services for the fourth consecutive year.
• Began the implementation of Project Helios (Epic) – one of the most extensive and fastest implementations ever undertaken by Henry Ford, which is designed to standardize and transform care and business processes System-wide.
• Henry Ford Hospital was among 12 hospitals in the United States honored for its efforts to prevent healthcare-associated infections by the Critical Care Societies Collaborative and the U.S. Department of Health and Human Services.
• The System was awarded $42.5 million in new research grants, a 10 percent increase over 2011, and awarded 10 new grants from the National Institutes of Health.
• Henry Ford was selected as “Company of the Year” by the Michigan Chronicle.

Henry Ford Health System, one of the country's largest and most comprehensive integrated health care systems, is a national leader in clinical care, research and education. The system includes the 1,200-member Henry Ford Medical Group, seven hospitals, Health Alliance Plan (a health insurance and wellness company), Henry Ford Physician Network, a 150-site ambulatory network and many other health-related entities throughout southeast Michigan, providing a full continuum of care. The health system also is a major economic driver in Michigan and employs more than 24,000 people. Henry Ford is a 2011 Malcolm Baldrige National Quality Award recipient. The health system is led by CEO Nancy Schlichting. To learn more, visit HenryFord.com.