How did they do?
Well first, below here's the Total Operating Revenues for each of them for the 9 months ended September 2012 and 2011:
| 9 Mos | 9 Mos | |||
| Sept | Sept | |||
| 2012 | 2011 | |||
| Total | Total | |||
| Operating | Operating | % | ||
| HQs | Revenues | Revenues | Change | |
| mils $ | mils $ | |||
| Kaiser Permanente | CA | 37,962 | 35,757 | 6% |
| Providence Health | WA | 7,757 | 6,309 | 23% |
| Sutter Health | CA | 7,179 | 6,679 | 7% |
| Mayo Clinic | MN | 6,542 | 6,182 | 6% |
| Adventist Health System | FL | 5,465 | 5,144 | 6% |
| North Shore Long Island Jewish Health | NY | 4,962 | 4,572 | 9% |
| Cleveland Clinic Health System | OH | 4,621 | 4,344 | 6% |
| Indiana University Health | IN | 4,129 | 3,172 | 30% |
| Banner Health | AZ | 3,650 | 3,570 | 2% |
| Henry Ford Health System | MI | 3,491 | 3,105 | 12% |
| Advocate HealthCare Network | IL | 3,444 | 3,294 | 5% |
| Catholic Health East | PA | 3,321 | 2,942 | 13% |
| Sentara HealthCare | VA | 3,222 | 2,893 | 11% |
| Carolinas Health Care System | NC | 3,092 | 2,739 | 13% |
| BJC Healthcare | MO | 2,881 | 2,717 | 6% |
| New York and Presbyterian Hospital | NY | 2,850 | 2,670 | 7% |
| Catholic Health Partners | OH | 2,845 | 2,657 | 7% |
| Texas Health Resources | TX | 2,753 | 2,557 | 8% |
| Novant Health | NC | 2,656 | 2,432 | 9% |
| SSM HealthCare | MO | 2,489 | 2,241 | 11% |
| Allina Health System | MN | 2,420 | 2,356 | 3% |
| Fairview Health Services | MN | 2,391 | 2,183 | 10% |
| Adventist Health West | CA | 2,175 | 1,959 | 11% |
| Memorial Sloan-Kettering Cancer Center | NY | 2,110 | 2,018 | 5% |
| Iowa Health System | IA | 2,036 | 1,699 | 20% |
| SCL Health Systems | KS | 2,024 | 1,909 | 6% |
| Franciscan Alliance | IN | 1,943 | 1,725 | 13% |
| The Methodist Hospital System | TX | 1,838 | 1,676 | 10% |
| BayCare Health System | FL | 1,821 | 1,708 | 7% |
| University Hospitals Health System | OH | 1,675 | 1,570 | 7% |
| Inova Health System | VA | 1,656 | 1,625 | 2% |
| Presbyterian Health Care Services | NM | 1,553 | 1,432 | 8% |
| Multicare Health System | WA | 1,119 | 1,032 | 8% |
| Nationwide Children's Hosital | OH | 1,094 | 954 | 15% |
| John Muir Health | CA | 1,055 | 1,009 | 5% |
| ProMedica Health Care | OH | 1,049 | 1,005 | 4% |
| St Luke's Episcopal Health System | TX | 933 | 926 | 1% |
| Children's HealthCare Atlanta | GA | 822 | 753 | 9% |
| Children's Medical Center of Dallas | TX | 774 | 744 | 4% |
| Total all 39 | 145,799 | 134,259 | 9% |
So clearly these 39 Hospital Organizations did just fine on the Revenue side, with Total Operating Revenues of $145.8 bil for the 9 Months Ended Sept 2012, up a robust 9% over the prior year.
And every one of the 39 Hospital Organizations had their Revenues increase.....talking about being recession resistant!
Think about the private sector. The Total Revenue increase for publicly-held companies for the same period was low single digits.
So why do these Hospital Organizations do so incredibly well in Total Operating Revenues? Well, part of it is the aging population. But more importantly, they are effectively monopolies in their local communities. People go to the hospital when they are really sick. It's a seller's market. Hospitals can charge whatever they want and they do. This is not right.....not even close to being right.
OK, so what about on the earnings front. Well, below here's the Total Operating Income for each of these 39 Non-Profit Hospital Organizations for the 9 months ended September 2012 and 2011:
| 9 Mos | 9 Mos | |||
| Sept | Sept | |||
| 2012 | 2011 | |||
| Operating | Operating | % | ||
| Income | Income | Change | ||
| mils $ | mils $ | |||
| Kaiser Permanente | CA | 1,492 | 1,340 | 11% |
| Sutter Health | CA | 472 | 551 | -14% |
| Indiana University Health | IN | 419 | 136 | 208% |
| Adventist Health System | FL | 360 | 281 | 28% |
| Mayo Clinic | MN | 278 | 493 | -44% |
| Banner Health | AZ | 230 | 248 | -7% |
| Texas Health Resources | TX | 218 | 129 | 69% |
| Advocate HealthCare Network | IL | 199 | 204 | -2% |
| Sentara HealthCare | VA | 188 | 203 | -7% |
| New York and Presbyterian Hospital | NY | 175 | 112 | 56% |
| Cleveland Clinic Health System | OH | 174 | 226 | -23% |
| Inova Health System | VA | 167 | 154 | 8% |
| BJC Healthcare | MO | 132 | 129 | 2% |
| BayCare Health System | FL | 121 | 106 | 14% |
| Allina Health System | MN | 121 | 157 | -23% |
| Novant Health | NC | 117 | 49 | 139% |
| Carolinas Health Care System | NC | 109 | 122 | -11% |
| Providence Health | WA | 106 | 187 | -43% |
| Children's HealthCare Atlanta | GA | 104 | 94 | 11% |
| Memorial Sloan-Kettering Cancer Center | NY | 103 | 138 | -25% |
| Adventist Health West | CA | 102 | 65 | 57% |
| Catholic Health Partners | OH | 100 | 88 | 14% |
| The Methodist Hospital System | TX | 97 | 119 | -18% |
| North Shore Long Island Jewish Health | NY | 96 | 93 | 3% |
| Multicare Health System | WA | 87 | 53 | 64% |
| Fairview Health Services | MN | 79 | 1 | 7800% |
| SSM HealthCare | MO | 76 | 48 | 58% |
| Nationwide Children's Hosital | OH | 74 | 66 | 12% |
| Franciscan Alliance | IN | 74 | 63 | 17% |
| John Muir Health | CA | 54 | 52 | 4% |
| Presbyterian Health Care Services | NM | 53 | 56 | -5% |
| Children's Medical Center of Dallas | TX | 52 | 92 | -43% |
| Catholic Health East | PA | 49 | 40 | 23% |
| ProMedica Health Care | OH | 47 | 65 | -28% |
| St Luke's Episcopal Health System | TX | 44 | 32 | 38% |
| University Hospitals Health System | OH | 42 | 26 | 62% |
| Iowa Health System | IA | 38 | 54 | -30% |
| Henry Ford Health System | MI | 32 | 31 | 3% |
| SCL Health Systems | KS | 22 | 4 | 450% |
| Total all 39 | 6,503 | 6,107 | 6% | |
| % of Total Operating Revenues | 4.46% | 4.55% |
So, Total Hospital Operating Income is up 6%, and as a % of Revenues is down very modestly. So, that all makes sense.....nothing really unusual. But still, that is $6.5 bil of Total Operating Profit for Non-Profit Hospitals.
But, now let's get to the real story. Below here's the Total Bottom Line Profit or Loss for each of these 39 Non-Profit Hospital Organizations for the 9 months ended September 2012 and 2011. The difference between Hospital Operating Income and Bottom Line Profit or Loss is mainly how the hospitals are doing with their investment returns on their massive amounts of Investments in Debt and Equity Securities. And it's also how well they are doing with all of their financial derivative (yeah, that dirty word again), not just on their investments, but also on their debt.
| 9 Mos | ||||
| 9 Mos | Sept | |||
| Sept | 2011 | |||
| 2012 | Bottom | |||
| Bottom | Line | |||
| Line | Profit | % | ||
| Profit | (Loss) | Change | ||
| mils $ | mils $ | |||
| Kaiser Permanente | CA | 2,087 | 1,539 | 36% |
| Providence Health | WA | 1,072 | 269 | 299% |
| Sutter Health | CA | 700 | 456 | 54% |
| Indiana University Health | IN | 553 | 140 | 295% |
| Advocate HealthCare Network | IL | 481 | (39) | 1333% |
| Cleveland Clinic Health System | OH | 480 | 51 | 841% |
| Banner Health | AZ | 455 | (40) | 1238% |
| Mayo Clinic | MN | 434 | 426 | 2% |
| Texas Health Resources | TX | 394 | 88 | 348% |
| BJC Healthcare | MO | 385 | 16 | 2306% |
| Adventist Health System | FL | 342 | 335 | 2% |
| The Methodist Hospital System | TX | 305 | (76) | 501% |
| Sentara HealthCare | VA | 301 | 236 | 28% |
| Carolinas Health Care System | NC | 300 | 18 | 1567% |
| BayCare Health System | FL | 291 | 12 | 2325% |
| Inova Health System | VA | 283 | 205 | 38% |
| Catholic Health East | PA | 277 | (6) | 4717% |
| Children's HealthCare Atlanta | GA | 259 | 22 | 1077% |
| New York and Presbyterian Hospital | NY | 253 | 61 | 315% |
| Memorial Sloan-Kettering Cancer Center | NY | 252 | (16) | 1675% |
| Catholic Health Partners | OH | 242 | 188 | 29% |
| North Shore Long Island Jewish Health | NY | 224 | 57 | 293% |
| Novant Health | NC | 181 | 25 | 624% |
| Franciscan Alliance | IN | 179 | (25) | 816% |
| SSM HealthCare | MO | 178 | (63) | 383% |
| Allina Health System | MN | 171 | 78 | 119% |
| Nationwide Children's Hosital | OH | 152 | 5 | 2940% |
| Iowa Health System | IA | 150 | (23) | 752% |
| ProMedica Health Care | OH | 146 | (11) | 1427% |
| Presbyterian Health Care Services | NM | 146 | (37) | 495% |
| Multicare Health System | WA | 144 | 5 | 2780% |
| SCL Health Systems | KS | 132 | (44) | 400% |
| Fairview Health Services | MN | 130 | (75) | 273% |
| Children's Medical Center of Dallas | TX | 109 | 64 | 70% |
| Adventist Health West | CA | 102 | 65 | 57% |
| St Luke's Episcopal Health System | TX | 85 | (176) | 148% |
| John Muir Health | CA | 54 | 52 | 4% |
| Henry Ford Health System | MI | 32 | 31 | 3% |
| University Hospitals Health System | OH | 25 | 22 | 14% |
| Total all 39 | 12,486 | 3,835 | 226% | |
| % of Total Operating Revenues | 8.56% | 2.86% |
No, those above numbers aren't misprints. The Total Bottom Line Profit of these 39 Non-Profit Hospital Organizations was $12.5 bil for the 9 months ended Sept 2012, up an off-the-charts 226% over the prior year. And not a dime of US Federal Income Tax is Paid on this $12,486 mil of Profit.
And for the 9 months ended Sept 2012, the Total Bottom Line Profit was 8.56% of Total Operating Revenues, which was nearly double the Total Hospital Operating Income margin of 4.46%.
And the Total Bottom Line Profit for the 9 months ended Sept 2012 was $12,486 mil, $5,983 mil higher than the Total Hospital Operating Income of $6,503 mil for the same period.
So, what's going on here? There's both a positive and a negative story.
On the very positive side, these hospital organizations did a much better job in having their massive investment portfolio managed in 2012. And they also did a much better job with their financial derivatives on both their investment portfolio and on their debt in 2012. And the overall markets were better.
Also on the positive side, Providence Health had a $767 mil Contribution from Swedish Affiliation in 2012 which bolstered its Bottom Line Profit.
But what's with the massive drop in Bottom Line Profit as compared with Hospital Operating Income in the 9 months ended Sept 2011? On a long-term basis, you should see a nice average annual increase here due to the interest income on the investments in debt securities and the dividends on the investments in equity securities.
But for the 9 months ended Sept 2011, the Total Hospital Operating Income was $6,107 mil, while the Total Bottom Line Profit was a much $3,835 mil, or a drop of $2,272 mil. And yeah, that's in comparison to a comparable increase of $5,983 mil in the 9 months ended Sept 2012, a profit swing of a massive $8,255 mil.
Frankly, it doesn't make any sense to me why there would be such a huge $2,272 mil drop between Total Hospital Operating Income and Total Bottom Line Profit in the 9 months ended Sept 2011.
These large investment portfolios of hospital organizations are managed by the large financial institutions (yeah, that dirty word again). And they also manage the financial derivatives (yeah, that dirty word again too) of the investment portfolios and debt of hospital organizations.
Someone needs to review just what was going on here with how these big financial institutions are managing this massive amount of money of these hospital organizations. I don't think the hospital organizations have people that really understand what is going on here, particularly with all of these complex financial derivatives. And I also don't think the Board of Directors of these non-profit hospital organizations really understand them either.
When you think about it, how well the massive investments and financial derivatives of these non-profit hospital organizations perform will eventually get reflected in US total health care costs. The ultimate beneficiary of these hospital investment returns are the ones paying the hospital bills.....the US Government, State Governments, businesses, and individuals. But none of these beneficiaries are reviewing these investment returns. This is a key missing link to bending down the long-term US health care cost curve.
Just the thought of the US Congress very aggressively trying to massively cut Medicare, Medicaid, and Social Security Benefits, while at the same time, no one in the US Government is reviewing what is going on with these massive amounts of investments in debt and equity securities of hospital organizations or what is going on with financial derivatives of these hospital organizations should be enough to flat out enrage retired and near-retired US citizens.
And just the fact that these 39 Non-Profit Hospital Organizations can generate $12.5 bil of Total Bottom Line Tax-free Profits in just the first 9 months of 2012, which was an increase of 226% over the prior 9 month period, while at the same time, the US Congress aggressively tries to cut Medicare, Medicaid and Social Security Benefits, should also be enough to enrage retired and near-retired US citizens. The way you remove excessive bottom line profits of Non-profit hospital organizations is to reduce the incredibly high fees charged to the hospital patient. It's that simple.
