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 absolutely humongous, especially when compared to the related earnings.
From a review of the Electronic Municipal Market Access (EMMA) for the Non-Profit Hospital Organizations and from a review of SEC filings for the Publicly-Held Hospital Organizations, below here are the 18 Hospital Organizations which had the Total of their Provisions for Bad Debts and Costs of their Uncompensated Charity Care exceed $500 mil for one year in their most recent audited financial statements:
|One Year||One Year||One|
|mils $s||mils $s||mils $s||mils $s||mils $s|
|Community Health Systems||TN||Dec 2012||1,959||125||2,084||619||504|
|Health Management Assoc||FL||Dec 2012||874||497||1,371||301||301|
|Tenet Healthcare||TX||Dec 2012||785||437||1,222||334||334|
|Universal Health Services||PA||Dec 2012||727||177||904||764||764|
|LifePoint Hospitals||TN||Dec 2012||624||31||655||244||244|
|Non-Profit Catholic Hospitals|
|Ascension Health Alliance||MO||Jun 2013||1,173||525||1,698||397||1,123|
|Dignity Health||CA||Jun 2013||1,094||198||1,292||284||812|
|Catholic Health Initiatives||CO||Jun 2013||821||321||1,142||(55)||490|
|Catholic Health East||PA||Dec 2012||235||436||671||118||383|
|Trinity Health||MI||Jun 2013||480||183||663||305||666|
|Providence Health||WA||Dec 2012||390||272||662||204||412|
|Non-Profit Non-Catholic Hospitals|
|Memorial Hermann Health||TX||Jun 2013||634||136||770||166||170|
|Banner Health||AZ||Dec 2012||488||149||637||290||601|
|Adventist Health||FL||Dec 2012||331||302||633||512||508|
|Cleveland Clinic||OH||Dec 2012||378||155||533||228||685|
|Sutter Health||CA||Dec 2012||376||153||529||549||791|
|Carolina's Health Care||NC||Dec 2012||356||153||509||168||375|
|Total all 18||15,495||6,631||22,126||8,322||12,057|
|Provision for Bad Debts||15,495||15,495|
|Uncompensated Charity Care Costs||6,631||6,631|
|Operating Income Excluding Bad Debts and Uncompensated Charity Care Costs||30,448|
|Bottom Line Pretax Income Excluding Bad Debts and Uncompensated Charity Care Costs||34,183|
So, these 18 Hospital Organizations had Audited Total Operating Income of $8.322 bil in the most recent fiscal year. Driving down this $8.322 bil Total Operating Income were Total Provisions for Bad Debts of a massive $15.495 bil and Total Costs of Uncompensated Charity Care of another $6.631 bil. Thus, exclusive of these two earnings charges, Total Operating Income would have been a massive $30.448 bil, which is $22.126 higher than the reported $8.322 bil.
And these 18 Hospital Organizations had Audited Total Bottom Line Pretax Income (both Operating Income and Non-Operating Income) of $12.057 bil in the most recent fiscal year. Driving down this $12.057 bil Total Bottom Line Pretax Income were Total Provisions for Bad Debts of a massive $15.495 bil and Total Costs of Uncompensated Charity Care of another $6.631 bil. Thus, exclusive of these two earnings charges, Total Bottom Line Pretax Income would have been a massive $34.183 bil, which is $22.126 bil higher than the reported $12.057 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 monstrous earnings charges are just for 18 Hospital Organizations and 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 monstrous 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.