The key single measure of the financial strength of a
Non-Profit Hospital Organization is its Net Assets, the excess of its Total Assets over its
Total Liabilities.
The Net Assets of Non-Profit Hospitals were very dismal after the 2008 financial meltdown. Since then, with much stronger stock and bond markets, coupled with the positive impact of much lower interest rates due to Fed Action, both happening during the Obama Administration, the Net Assets of Non-Profit Hospital Organizations have grown dramatically.
The Affordable Care Act also helped much here. The very thorough
intellectual discourse on health care delivery by many bright people working in the Health Care industry, as well
as by US Government personnel, resulted in fiscal measures adopted that has
added significantly to the financial strength of Non-Profit Hospital
Organizations.
From a review of the excellent EMMA system, I found 39 US Non-Profit Hospital Organizations which had December fiscal year ends and which also had Net Assets above $1 billion at September 2012, the most recent date's financial statements reported for the huge majority of these hospitals.
| Obama | |||||||
| Bump | |||||||
| 9 Months | 3 3/4 | ||||||
| 2012 | Years | ||||||
| 9-30-12 | 12-31-11 | % | 12-31-08 | % | |||
| Net Assets | Net Assets | Change | Net Assets | Change | |||
| mil $s | mil $s | mil $s | |||||
| Kaiser Permanente | CA | 16,311 | 12,495 | 31% | 11,431 | 43% | |
| Sutter Health | CA | 7,289 | 6,528 | 12% | 4,298 | 70% | |
| Providence Health | WA | 6,571 | 5,401 | 22% | 3,911 | 68% | |
| Adventist Health System | FL | 5,612 | 5,146 | 9% | 3,407 | 65% | |
| Mayo Clinic | MN | 5,290 | 4,729 | 12% | 2,326 | 127% | |
| Cleveland Clinic Health System | OH | 4,946 | 4,361 | 13% | 2,715 | 82% | |
| BJC Healthcare | MO | 4,440 | 4,031 | 10% | 2,705 | 64% | |
| Memorial Sloan-Kettering Cancer Center | NY | 4,174 | 3,941 | 6% | 3,224 | 29% | |
| Advocate HealthCare Network | IL | 4,061 | 3,560 | 14% | 1,842 | 120% | |
| The Methodist Hospital System | TX | 3,731 | 3,406 | 10% | 2,375 | 57% | |
| New York and Presbyterian Hospital | NY | 3,504 | 3,228 | 9% | 2,333 | 50% | |
| Carolinas Health Care System | NC | 3,502 | 3,189 | 10% | 2,340 | 50% | |
| Inova Health System | VA | 3,446 | 3,019 | 14% | 1,885 | 83% | |
| Catholic Health East | PA | 3,406 | 3,142 | 8% | 1,978 | 72% | |
| Indiana University Health | IN | 3,385 | 2,859 | 18% | 1,434 | 136% | |
| Banner Health | AZ | 3,355 | 2,897 | 16% | 1,669 | 101% | |
| Texas Health Resources | TX | 3,128 | 2,757 | 13% | 1,921 | 63% | |
| SCL Health Systems | KS | 2,814 | 2,686 | 5% | 2,571 | 9% | |
| BayCare Health System | FL | 2,708 | 2,417 | 12% | 1,523 | 78% | |
| Sentara HealthCare | VA | 2,708 | 2,406 | 13% | 1,489 | 82% | |
| Catholic Health Partners | OH | 2,494 | 2,261 | 10% | 1,614 | 55% | |
| Children's HealthCare Atlanta | GA | 2,467 | 2,193 | 12% | 1,482 | 66% | |
| North Shore Long Island Jewish Health | NY | 2,432 | 2,190 | 11% | 614 | 296% | |
| Novant Health | NC | 2,056 | 1,877 | 10% | 1,557 | 32% | |
| Franciscan Alliance | IN | 2,040 | 1,874 | 9% | 1,463 | 39% | |
| Iowa Health System | IA | 1,895 | 1,732 | 9% | 1,067 | 78% | |
| Allina Health System | MN | 1,606 | 1,409 | 14% | 804 | 100% | |
| SSM HealthCare | MO | 1,557 | 1,324 | 18% | 933 | 67% | |
| Adventist Health West | CA | 1,500 | 1,379 | 9% | 969 | 55% | |
| Henry Ford Health System | MI | 1,418 | 1,360 | 4% | 1,053 | 35% | |
| University Hospitals Health System | OH | 1,393 | 1,300 | 7% | 1,078 | 29% | |
| ProMedica Health Care | OH | 1,391 | 1,288 | 8% | 1,042 | 33% | |
| Nationwide Children's Hosital | OH | 1,376 | 1,210 | 14% | 761 | 81% | |
| Children's Medical Center of Dallas | TX | 1,353 | 1,219 | 11% | 821 | 65% | |
| Presbyterian Health Care Services | NM | 1,340 | 1,191 | 13% | 706 | 90% | |
| Fairview Health Services | MN | 1,234 | 1,113 | 11% | 732 | 69% | |
| Multicare Health System | WA | 1,211 | 1,113 | 9% | 650 | 86% | |
| John Muir Health | CA | 1,196 | 1,099 | 9% | 756 | 58% | |
| St Luke's Episcopal Health System | TX | 1,050 | 964 | 9% | 692 | 52% | |
| Total all 39 | 125,390 | 110,294 | 14% | 76,171 | 65% |
Yeah, it seems incredible, but the Total Net Assets of these Non-Profit Hospital Organizations have increased by a massive 65% during the Obama Administration.....for the 3 3/4 years from December 2008 to September 2012.
And the Total Net Assets of these Non-Profit Hospital Organizations increased by 14% in just the most recent 9 months.
So, just what kinds of Assets do Non-Profit Hospitals have?
When you think of Hospital assets, what quickly comes to mind are huge Buildings, Land, and Hospital Equipment.
In a recent study I performed, as probably a surprise to many, Total Investments of Non-Profit Hospital Organizations comprise 43% of Total Assets, higher than Total Property, Plant and Equipment, which comprises 37% of Total Assets.
Why is this the case?
Well, the decades of tax-free hospital profits and tax-free investment returns are by far the predominant driver of the growth in the treasure chest of Non-Profit Hospital Organizations' Investments in equity and debt securities.
So, what's the downside to these huge buildups in both Investments and in Net Assets?
Well, they don't reduce health care costs. What has to happen is that when Net Assets become so huge, the Non-Profit Hospital must return much of this excess to hospital patients and to the US Government through substantial reductions in fees charged the patient by the hospital.
When you think of Hospital assets, what quickly comes to mind are huge Buildings, Land, and Hospital Equipment.
In a recent study I performed, as probably a surprise to many, Total Investments of Non-Profit Hospital Organizations comprise 43% of Total Assets, higher than Total Property, Plant and Equipment, which comprises 37% of Total Assets.
Why is this the case?
Well, the decades of tax-free hospital profits and tax-free investment returns are by far the predominant driver of the growth in the treasure chest of Non-Profit Hospital Organizations' Investments in equity and debt securities.
So, what's the downside to these huge buildups in both Investments and in Net Assets?
Well, they don't reduce health care costs. What has to happen is that when Net Assets become so huge, the Non-Profit Hospital must return much of this excess to hospital patients and to the US Government through substantial reductions in fees charged the patient by the hospital.
Most of these Non-Profit Hospital Organizations are already making very robust Hospital Operating Profits.
In addition, they are now generating very nice investment returns, from their huge treasure chest of Investments in debt and equity securities, which are not included in their Hospital Operating Income.
And the overwhelming majority of these Non-Profit Hospital Organizations will be making just extravagantly obscene Hospital Operating Profits, starting in 2014 and 2015, given the huge earnings increases which will result from both the lower Provisions for Bad Debts as well as from the previously Foregone Revenues from Charity Care Patient Services, both due to the Affordable Care Act totally kicking in then. This is due to many of the uninsured than getting insured and to many of the underinsured then getting better insured.
For the US Congress to reduce Medicare and Medicaid benefits on lower and middle income citizens in order to reach a Grand Bargain on US Debt, when at the same time, these Non-Profit Hospital Organizations will be making such extravagantly obscene profits, and accumulating such an incredibly huge amount of Net Assets, would take US Congressional mean-spiritedness and ineptitude to a completely different level.
Not only will this substantially reduce Medicare and Medicaid costs in the long run, but it will also cut health care costs of businesses and of individuals. Thus, it will also bend down sharply the long-term health care cost curve.
In addition, they are now generating very nice investment returns, from their huge treasure chest of Investments in debt and equity securities, which are not included in their Hospital Operating Income.
And the overwhelming majority of these Non-Profit Hospital Organizations will be making just extravagantly obscene Hospital Operating Profits, starting in 2014 and 2015, given the huge earnings increases which will result from both the lower Provisions for Bad Debts as well as from the previously Foregone Revenues from Charity Care Patient Services, both due to the Affordable Care Act totally kicking in then. This is due to many of the uninsured than getting insured and to many of the underinsured then getting better insured.
For the US Congress to reduce Medicare and Medicaid benefits on lower and middle income citizens in order to reach a Grand Bargain on US Debt, when at the same time, these Non-Profit Hospital Organizations will be making such extravagantly obscene profits, and accumulating such an incredibly huge amount of Net Assets, would take US Congressional mean-spiritedness and ineptitude to a completely different level.
Rather than reducing the US Debt by reducing Medicare and
Medicaid benefits the elderly receive, a far better way to reduce US Debt is by cutting Medicare
and Medicaid costs resulting from the substantial financial strengthening (i.e. Net Assets) of
Non-Profit Hospital Organizations, which will give them the financial
flexibility to reduce markedly their Patient Service Fees charged.
Not only will this substantially reduce Medicare and Medicaid costs in the long run, but it will also cut health care costs of businesses and of individuals. Thus, it will also bend down sharply the long-term health care cost curve.
Even though the Affordable Care Act has already substantially strengthened the Net Assets of Non-Profit Hospital Organizations, there is so much more that needs to be done to drive down total US health care costs.
And the hospitals are where this huge opportunity exists to dramatically further bring down the total US health care costs. There needs to be an all-out assault on the elimination of all extravagant and unnecessary costs incurred by Non-Profit Hospital Organizations.
And there also must be certainty that this excess buildup in Net Assets of Non-Profit Hospitals gets transferred to hospital patients in lower patient service fees.
The ultimate beneficiary of these massive buildups of Net Assets of Non-Profit Hospital Organizations are the
ones paying the hospital bills.....the US Government, State
Governments, businesses, and individuals.
Let's hope the US Congress can properly redirect its attention from attempting to cut Medicare and Medicaid Benefits so much to the true main problems causing the very high US health care costs which are the excessive profits and Net Asset buildups of the Non-Profit Hospital Organizations, both now and even more so in the future, and the massive amounts of inefficiencies in health care delivery.
