Tuesday, June 26, 2012

US Non-Profit Hospitals On Life Support Recuperate By Successful Obama Financial Surgery

In a recent post, I revealed how the financial strength of US Catholic Hospital Organizations, which hold an extensive treasure chest of investments in common stocks and bonds, which substantially exceed in amount the total investments in property and equipment by these same hospitals, was just thoroughly and completely devastated in 2008 by the financial meltdown of the US economy.

And it wasn't just the massive amounts of investments in common stocks and bonds which were on the books of these US Catholic Hospitals.  In addition, there are massive amounts of investments in common stocks and bonds that are off books, in footnotes.  These would be these investments in pension trusts of Catholic Hospitals.

And in addition, there are so many financial swaps entered into by Catholic Hospitals.

Further, when you review the type of investments in bonds and other debt instruments, you can see there are many that were investments in US Government Agencies like Fannie Mae and Freddie Mac.  Also, there are many investments in residential mortgages backed by Fannie Mae and Freddie Mac.

When you go back to the financial meltdown in 2008, not only did the stock market end up crashing, but also so many financial institutions were about to go belly up.

And because of their massive losses, mostly driven by both Credit Losses and Derivative Losses, both Fannie Mae and Freddie Mac were bankrupt, with losses so large and expected to continue for many years.

Thus so many Non-Profit Hospitals, both Catholic and Non-Catholic, were also in serious financial jeopardy.  Not only did their investments in common stocks crash, but they had massive investments in debt instruments linked to Fannie Mae and Freddie Mac, two flat out bankrupt entities.

And they also had investments in US corporate debt, where the corporations had huge amounts of debt instruments linked to Fannie Mae and Freddie Mac.

And much of these hospital investments in US corporate debt were with corporations whose earnings had collapsed with the deep recession.

Further, many of these Non-Profit Hospitals took huge losses on their financial swaps.  

When a typical person thinks of Non-Profit Hospitals, they expect to see a massive amount of Property and Equipment on the balance sheet.  Thus, this person wouldn't expect to see Non-Profit Hospitals substantially impacted much by the financial meltdown of 2008.

But so many of these Non-Profit Hospitals held investments in equity and debt instruments that far exceed their investments in Hard Hospital Assets.  And when you also factor in all of the equity and debt instruments held in the pension trusts of Non-Profit Hospitals, this excess of Soft Investments in Equity and Debt Instruments over Hard Investments in Property and Equipment balloons up.

Further, with the deep, lengthy recession, hospital bad debts from patient accounts receivable were continually going through the roof.  And so were hospital charity care costs, which were also continually and dramatically increasing due to the deep, lengthy recession. 

When I get some time, I will later be a lot more specific on the balance sheet and income statement makeups of some of these huge Non-Profit Hospitals.

But for now, suffice it to say that many Non-Profit Hospitals were in serious financial jeopardy in late 2008 and early 2009, before the Obama Team, aided by the Fed, went into action.

The end result was a stock market that subsequently nearly doubled over the next three years, a rescue of the auto industry, and a massive turn around of so many financial institutions which were clearly headed for the junk pile, including AIG, Merrill Lynch, Wachovia, Bank of America, Citigroup, and so many banks.

These financial institutions were all cleaned up by the Obama Administration, with able assistance from the Fed, with an overall result of not costing US taxpayers a dime.

The clear exceptions are Fannie Mae and Freddie Mac, which were overseen by an independent government entity, and thus the Obama Administration had no control over.

And after many years of massive losses, even both Fannie Mae and Freddie Mac registered positive Pretax Income in the most recent 1Q 2012.  I have a hunch that the independent government entity overseeing Fannie and Freddie might have decided to start listening to the financial recommendations of the Obama Administration regarding Fannie and Freddie.  After all, there was a magical financial turnaround in both Fannie and Freddie in the most recent quarter.  Let's hope it continues.

And hospital investments in debt securities of corporations were subsequently enhanced in value by the dramatically higher earnings of these corporations, making their debt securities much more secure.

Thus, in near miraculous fashion, this severely-damaged financial strength of these Non-Profit Hospitals has been resurrected in the most recent three years, due mainly to many wise, decisive actions by the Obama Administration, coupled with assistance by actions by the Fed, which created a US economic infrastructure which permitted US businesses, of all sizes and in all industries, to flourish.  Thus the investments of these Non-Profit Hospitals in stocks and debt instruments of US businesses have also been substantially enhanced.

Total Net Assets, or the Excess of Total Assets over Total Liabilities, is the singularly salient measure of the financial strength of a Non-Profit Hospital.

When the Total Net Assets of a Non-Profit Hospital increases significantly, with this enhanced financial strength, the Hospital can now borrow at more favorable interest rates.  And they can refinance a good chunk of their existing higher interest rate hospital borrowings at the current, lower prevailing interest rates.  And the Fed has really helped on interest rates here.

In my earlier recent post on US Catholic Hospitals, I found 22 of them with Net Assets (i.e. Excess of Total Assets over Total Liabilities) of more than $800 mil each, and which had comparable Net Asset disclosures in the most recent three-year period. These financial statements of Hospitals were found mainly in two very fine Internet sources: DAC Bond and EMMA (i.e. Electronic Municipal Market Access of the Municipal Securities Rulemaking Board).

These 22 Catholic Hospital Organizations had total Net Assets of $70.3 bil at the most recent reported balance sheet date, which was March 31, 2012 for most of them.

In comparison, the total Net Assets of these same 22 Catholic Hospital Organizations was $63.6 bil one year ago, and was $49.3 bil at their respective fiscal year ends (FYEs) of the closest date to three years earlier.

Thus, the Net Assets of these 22 Catholic Hospital Organizations increased by $21 bil, or by 42%, in just the most recent three years, or during the entire Obama Administration so far.

When you think about it, that 42% Net Asset growth in only three years is just incredible. The overwhelming majority of the Net Assets balance at any time is the cumulative tax-free profits, both from hospital operations and from investments, since the inception of the hospital organizations.

In just the most recent three years, these 22 Catholic Hospital Organizations generated a 42% profit growth on their Net Asset balance of three years ago, which was accumulated over decades and decades of hospital operations and investment returns.

Clearly, the executives of Catholic Hospitals, all employees of Catholic Hospitals, all retirees of Catholic Hospitals, the Board of Directors of Catholic Hospitals, and the bondholders of these Catholic Hospitals have to all be just elated with what has happened with the financial strength of their Catholic Hospitals during the Obama Administration.

In this post, I am addressing the US Non-Catholic, Non-Profit Hospitals.  With a quick review, I found 81 of these Hospital Organizations which had Total Net Assets above $1 bil each.

What has happened to the Total Net Assets of these 81 Non-Catholic, Non-Profit Hospital Organizations during the Obama Administration so far?

Well, even better than what happened with the Catholic Hospitals, whose Total Net Assets grew by 42%.

The Non-Catholic, Non-Profit Hospitals had their Total Net Assets Increase by a higher 49% during the Obama Administration.

Their Total Net Assets at the most recent reported balance sheet date, or at March 2012 for the overwhelming majority of them, were $185 bil, or an increase of $61 bil in roughly the most recent three years.  Whew!

Clearly, the executives, employees, retirees, Board of Directors, and Bondholders of these Non-Catholic, Non-Profit Hospital Organizations have to all be just elated with what has happened with the financial strength of their Hospitals during the Obama Administration.

And frankly, so should hospital patients, US businesses, and US taxpayers.  

Why?  Because if the Obama Administration had not completely rescued these Non-Profit Hospitals, the US health care cost curve would have sloped substantially upward, with resultant massively higher hospital patient fees, higher health insurance premiums, and higher Medicare and Medicaid costs.

And also frankly, how in the world could the US Supreme Court be in a position of making a sufficiently reasoned ruling on health insurance mandates and perhaps even on whether the Affordable Care Act should be overthrown, when they couldn't possibly have the necessary understanding on the finances of Non-Profit Hospitals, which is both so complicated and also so critical to the viability of the entire US Health Care System. 

And it's pretty clear that the US Congress doesn't have the requisite understanding of the financial aspects of the US Health Care System.  

The only part of the US Government that does is the Obama Administration, working in conjunction with the Fed.

Below here are these 81 Non-Catholic, Non-Profit Hospital Organizations, along with their Net Asset Amounts at the Most Recently Reported Balance Sheet Date and at the Fiscal Year Ended (FYE) closest to Three Years Earlier, thus roughly during the most recent three years of the Obama Administration.





Most Three Three Obama Obama



Recent Years Years Bump Bump


Most Balance Earlier Earlier Net Net


Recent Sheet FYE FYE Assets Assets


Balance Net Balance Net Increase Increase


Sheet Assets Sheet Assets Amount %
Hospital Organization HQs Date mils $s Date mils $s mils $s








Kaiser Permanente Oakland, CA Mar 12 13,995 Dec 08 11,431 2,564 22%
Sutter Health Sacramento, CA Mar 12 6,882 Dec 08 4,298 2,584 60%
Partners Healthcare System Boston, MA Mar 12 5,888 Sep 09 4,975 913 18%
Adventist Health System Winter Park, FL Dec 11 5,146 Dec 08 3,407 1,739 51%
Mayo Clinic Rochester, MN Mar 12 5,032 Dec 08 2,326 2,706 116%
Cleveland Clinic Health System Cleveland, OH Mar 12 4,711 Dec 08 2,715 1,996 74%
UPMC Pittsburgh, PA Mar 12 4,305 Jun 09 2,756 1,549 56%
BJC HealthCare St Louis, MO Mar 12 4,293 Dec 08 2,705 1,588 59%
Memorial Sloan-Kettering Cancer Center NY, NY Mar 12 4,114 Dec 08 3,224 890 28%
Advocate HealthCare Network Oak Brook, IL Mar 12 3,808 Dec 08 1,842 1,966 107%
The Methodist Hospital System Houston, TX Mar 12 3,658 Dec 08 2,375 1,283 54%
NY and Presbyterian Hospital NY, NY Mar 12 3,373 Dec 08 2,333 1,040 45%
Banner Health Phoenix, AZ Mar 12 3,258 Dec 08 1,669 1,589 95%
Inova Health System Northern VA Mar 12 3,243 Dec 08 1,885 1,358 72%
Johns Hopkins Health System Baltimore, MD Mar 12 3,234 Jun 09 1,273 1,961 154%
Children's Medical Center Boston Boston, MA Mar 12 3,204 Sep 09 2,516 688 27%
Indiana University Health Indianapolis, IN Mar 12 3,003 Dec 08 1,434 1,569 109%
Baylor Health Care System Dallas, TX Mar 12 2,991 Jun 09 2,166 825 38%
Texas Health Resources Dallas, TX Mar 12 2,964 Dec 08 1,921 1,043 54%
Carolinas Health Care System Charlotte, NC Dec 11 2,911 Dec 08 2,087 824 39%
Northwestern Memorial Health Care Chicago, IL Feb 12 2,623 Aug 09 1,642 981 60%
Texas Children's Hospital Houston, TX Mar 12 2,591 Sep 09 2,088 503 24%
Baycare Health System Tampa, FL Mar 12 2,571 Dec 08 1,523 1,048 69%
Sentara Health Care Norfolk, VA Mar 12 2,565 Dec 08 1,489 1,076 72%
Jefferson Health System Radnor, PA Mar 12 2,491 Jun 09 1,860 631 34%
Children's Hospital Philadelphia Philadelphia, PA Dec 11 2,471 Jun 09 1,938 533 28%
Children's Healthcare of Atlanta Atlanta, GA Mar 12 2,347 Dec 08 1,482 865 58%
Baptist Health South Florida Miami, FL Mar 12 2,243 Sep 09 1,571 672 43%
OhioHealth Columbus, OH Mar 12 2,188 Jun 09 1,259 929 74%
NorthShore Long Island Jewish Health NY, NY Mar 12 2,167 Dec 08 614 1,553 253%
Duke University Health System Durham, NC Mar 12 2,147 Jun 09 1,392 755 54%
Scripps Health San Diego, CA Mar 12 2,081 Sep 09 1,354 727 54%
Memorial Hermann Healthcare System Houston, TX Mar 12 2,009 Jun 09 1,509 500 33%
Novant Health Winston-Salem, NC Mar 12 1,957 Dec 08 1,557 400 26%
Oregon Health & Science University Portland, OR Mar 12 1,926 Jun 09 1,570 356 23%
Iowa Health System Des Moines, IA Mar 12 1,845 Dec 08 1,067 778 73%
University Penn Health System Philadelphia Mar 12 1,826 Jun 09 1,163 663 57%
Baptist Memorial Health Care Memphis, TN Mar 12 1,816 Sep 09 1,501 315 21%
NorthShore University Health Systems Evanston, IL Mar 12 1,732 Sep 09 1,443 289 20%
Geisinger Health System Danville, PA Mar 12 1,706 Jun 09 901 805 89%
Sanford Sioux Falls, SD Mar 12 1,699 Jun 09 1,242 457 37%
Spectrum Health System Grand Rapids, MI Mar 12 1,569 Jun 09 1,128 441 39%
ProMedica Health Care Toledo, OH Dec 11 1,535 Dec 08 1,042 493 47%
Rush University Medical Center Chicago, IL Mar 12 1,506 Jun 09 1,073 433 40%
Stanford Hospital & Clinics Palo Alto, CA Feb 12 1,495 Aug 09 807 688 85%
Allina Health System Minneapolis, MN Mar 12 1,491 Dec 08 804 687 85%
Seattle Children's Healthcare Seattle, WA Mar 12 1,488 Sep 09 1,195 293 25%
Adventist Health West Roseville, CA Mar 12 1,400 Dec 08 969 431 44%
University Hospitals Health System Cleveland, OH Mar 12 1,392 Dec 08 1,078 314 29%
Christiana Care Health Services Wilmington, DE Mar 12 1,392 Jun 09 881 511 58%
Henry Ford Health System Detroit, MI Mar 12 1,386 Dec 08 1,053 333 32%
LifeSpan Providence, RI Mar 12 1,368 Sep 09 1,225 143 12%
Premier Health Partners Dayton, OH Dec 11 1,330 Dec 08 1,111 219 20%
Sharp Health Care San Diego, CA Mar 12 1,330 Sep 09 806 524 65%
South Broward Hospital District Hollywood, FL Jan 12 1,322 Apr 09 1,011 311 31%
Children's Memorial Medical Center Chicago, IL Feb 12 1,322 Aug 09 1,051 271 26%
Nationwide Children's Hospital Columbus, OH Mar 12 1,319 Dec 08 761 558 73%
Children's Medical Center of Dallas Dallas, TX Mar 12 1,313 Dec 08 821 492 60%
Cook Children's Health Dallas, TX Mar 12 1,303 Sep 09 840 463 55%
University Maryland Medical System Baltimore, MD Mar 12 1,301 Jun 09 904 397 44%
Presbyterian Health Care Services New Mexico Mar 12 1,291 Dec 08 706 585 83%
CareGroup Health Care System Boston, MA Mar 12 1,254 Sep 09 978 276 28%
Fairview Health Services Minneapolis, MN Mar 12 1,192 Dec 08 732 460 63%
Multicare Health System Tacoma, WA Mar 12 1,183 Dec 08 650 533 82%
John Muir Health Walnut Creek, CA Mar 12 1,164 Dec 08 756 408 54%
University of Chicago Medical Center Chicago, IL Mar 12 1,154 Jun 09 823 331 40%
Froedtert Health Milwaukee, WI Mar 12 1,138 Jun 09 824 314 38%
Orlando Health Orlando, FL Mar 12 1,136 Sep 09 875 261 30%
Virginia Commonwealth University Health Richmond, VA Mar 12 1,115 Jun 09 756 359 47%
Medical College of Wisconsin Milwaukee, WI Mar 12 1,112 Jun 09 808 304 38%
Wellstar Health System Marietta, GA Mar 12 1,102 Jun 09 715 387 54%
Cone Health Greensboro, NC Mar 12 1,076 Sep 09 894 182 20%
Mission Health System Asheville, NC Mar 12 1,071 Sep 09 882 189 21%
MedStar Health Columbia, MD Mar 12 1,054 Jun 09 647 407 63%
St Luke's Episcopal Health System Houston, TX Mar 12 1,053 Dec 08 692 361 52%
Children's Hospital Colorado Denver, CO Mar 12 1,043 Dec 08 678 365 54%
Alegent Health Omaha, NE Mar 12 1,030 Jun 09 835 195 23%
Children's Hospital Los Angeles Los Angeles, CA Mar 12 1,028 Jun 09 758 270 36%
Lehigh Vallley Health Network Allentown, PA Mar 12 1,028 Jun 09 590 438 74%
North Carolina Baptist Hospital Winston-Salem, NC Mar 12 1,016 Jun 09 715 301 42%
Nemours Foundation Jacksonville, FL Dec 11 1,008 Dec 08 744 264 35%





Total all 81 Hospital Organizations
184,824
124,121 60,703 49%

Yeah, that's correct, these 81 Non-Catholic, Non-Profit Hospital Organizations had their Total Net Assets, the salient measure of their financial strength, grow by more more than $60 bil, or by a massive 49%, in the span of the Obama Administration so far.  And all 81 of them had at least double-digit percentage increases in their Total Net Assets during the Obama Administration, with the lowest increase being 12%.

And below here, from a quick review, are 12 other Non-Catholic, Non-Profit Hospital Organizations which had Total Net Assets of more than $1 bil, but did not have very recent disclosures of their Total Net Assets, and thus the change in their Total Net Assets was only for mostly just Two Years.





Most Two Two Obama Obama



Recent Years Years Bump Bump


Most Balance Earlier Earlier Net Net


Recent Sheet FYE FYE Assets Assets


Balance Net Balance Net Increase Increase


Sheet Assets Sheet Assets Amount %
HQs Date mils $s Date mils $s mils $s
Hospitals with Two Year Net Asset Changes



St. Jude Children's Research Hospital
Memphis, TN Jun 11 2,542 Jun 09 1,907 635 33%
Cedars-Sinai Medical Center Los Angeles, CA Jun 11 1,997 Jun 09 1,517 480 32%
University of Michigan Hospitals & Health Sciences Ann Arbor, MI Jun 11 1,751 Jun 09 1,537 214 14%
UCLA Medical Center Los Angeles, CA Jun 11 1,715 Jun 09 1,350 365 27%
University of North Carolina Healthcare System Chapel, NC Jun 11 1,694 Jun 09 1,327 367 28%
NYU Langone Medical Center NY, NY Aug 11 1,584 Aug 09 1,277 307 24%
Children's Hospital Cincinnati Cincinnati, OH Jun 11 1,534 Jun 09 1,140 394 35%
Hoag Memorial Hospital Presbyterian Newport Beach, CA Sep 11 1,499 Sep 09 1,375 124 9%
Packard Children's Hospital Palo Alto, CA Aug 11 1,243 Aug 09 1,068 175 16%
Dallas County Hospital District (Parkland) Dallas, TX Dec 11 1,187 Sep 09 962 225 23%
University California San Francisco San Fran, CA Jun 11 1,124 Jun 09 761 363 48%
University of Iowa Hospitals & Clinics Iowa City, IA Jun 11 1,107 Jun 09 969 138 14%








Total all 12

18,977
15,190 3,787 25%