Indiana Hospital Profits Will Sharply Increase If Medicaid Is Expanded

Under the Affordable Care Act (ACA), Hospital Organizations' both future Hospital Operating Income and Bottom Line Income will be bolstered very robustly due to many of the Uninsured getting insurance and also due to the many of the Underinsured getting much better insurance.

And for Hospital Organizations operating hospitals in States electing to Expand Medicaid, this future Profit growth will be exceptionally robust.

There are specifically two items which will drive higher Hospital Organization profits due to the ACA and also especially due to States electing the Expansion of Medicaid.

First, there is the Operating Statement Provision for Bad Debts' earnings charge which will be dramatically reduced due to the substantially better insurance situation of hospital patients.  This Provision for Bad Debts' earnings charge is usually a separate report line on a Hospital Organization's audited Operating Statement.

And second, there is the Operating Statement Uncompensated Charity Care Costs' earnings charge for the amounts hospitals spend on charity care which will also be dramatically reduced.  This Estimated Costs for Uncompensated Charity Care is disclosed in a Hospital Organization's footnotes which accompany its audited financial statements.

So what about the amounts of these two items?  Well, they are very large, especially when compared to the related Hospital Operating Income.

From a review of the Electronic Municipal Market Access (EMMA) and the Indiana State Dept of Health website, below here are the 26 Indiana Non-Profit Hospital Organizations which had the Total of their Provisions for Bad Debts and Costs of their Uncompensated Charity Care exceed $10 mil for one year in their most recent audited financial statements:

				One Year	One
			One Year	Estimated	Year	One
		Most	Provision	Cost of	Total	Year
		Recent	For	Uncompensated	Earnings	Hospital
		Annual	Bad	Charity	Charge	Operating
		FYE	Debts	Care	of Both	Income
			mils $s	mils $s	mils $s	mils $s
Indiana Hospital Organizations
IU Health		Dec 2012	285	204	489	549
St Vincent Health		Jun 2013	115	86	201	156
Franciscan Alliance		Dec 2012	107	84	191	80
Community Health Network		Dec 2012	76	58	134	48
Parkview Health System		Dec 2012	105	23	128	116
Deaconess Health System		Sep 2012	42	31	73	40
Community Healthcare Syst		Jun 2013	42	21	63	37
Beacon Health System		Dec 2012	52	9	61	120
Union Hospital		Aug 2012	41	13	54	26
Reid Hospital&Health Svcs		Dec 2012	31	10	41	6
Clark Memorial Hospital		Dec 2012	32		32	(1)
The Methodist Hospitals		Dec 2012	15	15	30	27
Floyd Memorial Hospital		Dec 2012	26		26	12
St Mary's Health		Jun 2012	1	23	24	62
Hendricks Regional Health		Dec 2012	21	2	23	26
Marion General Hospital		Jun 2012	15	8	23	13
Good Samaritan		Dec 2012	17	5	22	5
Columbus Regional Hospital		Dec 2012	15	6	21	8
Jackson County Schneck		Dec 2012	18	2	20	14
Howard Regional Health		Dec 2011	13	4	17	2
Witham Health Services		Dec 2012	13	3	16	29
Riverview Hospital		Dec 2011	13	3	16	6
Major Health Partners		Dec 2012	11	3	14	6
Hancock Regional Hospital		Dec 2012	10	2	12	7
Henry County Hospital		Dec 2012	10	2	12	-
Dearborn County Hospital		Dec 2012	9	1	10	5
Total all 26			1,135	618	1,753	1,399
Provision for Bad Debts						1,135
Estimated Costs of Uncompensated Charity Care						618
Operating Income Excluding Bad Debts and Uncompensated Charity Care Costs						3,152

So, these 26 Indiana Non-Profit Hospital Organizations had Audited Total Hospital Operating Income of $1.399 bil in the most recent fiscal year.  Driving down this $1.399 bil Total Hospital Operating Income were Total Provisions for Bad Debts of a massive $1.135 bil and Total Costs of Uncompensated Charity Care of another $0.618 bil.  Thus, exclusive of these two earnings charges, Total Hospital Operating Income would have been $3.152 bil, which is $1.753 bil higher than the reported $1.399 bil.
 
Granted these two earnings charges will not be totally eliminated with the ACA and in combination with States electing to Expand Medicaid, but a substantial amount of these two earnings charges will be eliminated, and especially so if States elect to Expand Medicaid, which is the predominant driver of these two earnings charges being very substantially reduced.

And the above two large earnings charges are just for one year.

I really don't understand how a financially savvy State Governor and financially savvy State Legislatures could possibly vote to not Expand Medicaid.  The US Government is 100% funding the first three years of Medicaid Expansion.

Further, if Medicaid is Expanded, the Hospital Organizations will be getting these just huge increases in their annual earnings in each future year, which will ultimately accrue to the benefit of State citizens when they are hospitalized and will be paying much lower hospital charges.  It will also cut the US Debt markedly since the US Government is paying for a good chunk of these hospitalization charges.

I really can't understand why some State Governors and State Legislators would want to financially hammer their State Hospital Organizations, their State citizens and the US Government Debt load like this.

Very financially astute Republican State Governors like Ohio's John Kasich and Florida's Rick Scott, who also has a keen insight on this issue since he was formerly a CEO of a large hospital organization, already have this all figured out.  And so has Arizona Republican Governor Jan Brewer.  And so has the perceptive US stock market which has moved up dramatically the market prices of the common stocks of the Publicly-Held Hospital Organizations.