Tuesday, November 12, 2013

Arizona Non-Profit Hospital Earnings On Fire Under Obamacare and Headed Much Higher

From a review of the Electronic Municipal Market Access (EMMA), I found 3 Non-Profit Hospital Organizations headquartered in the State of Arizona with Net Assets at the most recent date reported of more than $400 mil each.  Below here are the Bottom Line Profits, Total Operating Revenues  and the related Profit Margin Percentages in the most recent audited fiscal year reported for each of these 3 Arizona Non-Profit Hospital Organizations:



Annual Bottom

Fiscal Line Total Profit

City Year Net Operating Margin

HQs End Income Revenues %

mils $s mils $s
Arizona Hospital Organizations

Banner Health Phoenix Dec 2012          601             4,878 12.3%
Scottsdale Healthcare Scottsdale Sep 2012          109               851 12.8%
Northern Arizona Healthcare Flagstaff Jun 2013            54               535 10.1%

Total all 3

         764             6,264 12.2%

As you can see in the above chart, the Total Bottom Line Profits for these 3 Arizona Non-Profit Hospital Organizations was $764 mil in the most recent audited fiscal year reported, which was an exceptionally robust 12.2% of Total Operating Revenues.  As a comparison, the Combined Bottom Line Profit Margin of the prestigious 30 Dow Industrial companies was a substantially lower 9.6% of their Total Revenues in the most recent year.  CEOs and CFOs of the 30 Dow Industrial companies keenly aware of how difficult it is for them to generate profit margin percentages must be in utter disbelief at how Non-Profit Hospitals can possibly be doing so well on the profit margin percentage front.

When you compare the 12.2% Total Bottom Line Profit Margin of these 3 Arizona Non-Profit Hospital Organizations with the 9.6% Total Bottom Line Profit Margin of the 30 Dow Industrials, which are some of the very best For-Profit US companies, the clear conclusion is that the earnings of these Arizona Non-Profit Hospital Organizations in the most recent year were on fire.

But it also reveals a main reason why the US Health Care Costs are so much out of control.....Hospitals charge way too much and retain these excess charges in their Bottom Line Profits which get added to their massive treasure chest of Investments in Stocks and Bonds.  And the US Congress, both Republicans and Democrats, nearly all 100% subservient to Hospitals, just sits there and twiddles its thumbs and refuses to work together for the common good of the country.  With this complete lack of governance, coupled with consistently choosing Hospitals over People, it's no wonder why the approval rating of the US Congress is now less than 10%.

These very strong bottom line profits of these 3 Arizona Non-Profit Hospital Organizations were attributable to superb fiscal measures and much more effective health care delivery adopted by hospital executives and hospital employees, which were initiated in conjunction with Obamacare.  In addition, the strong US stock market and lower interest rates added to investment returns and thus also to bottom line profits of these Hospital Organizations.

But there's even more to this incredibly massive earnings story.

When the Insurance Exchanges kick in starting in 2014, these Arizona Non-Profit Hospital Organizations should see their profits increase even more......and by quite a bit more.

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

With these very exceptionally strong, ongoing Arizona Hospital earnings under Obamacare, the ultimate result should be a reduction in hospital patient charges, a bending back of the US Long-term Total Health Care Cost Curve and a reduction in the US Debt.

That's quite a financial Trifecta!

And it also only makes sense that some of these huge past and future bottom line profits of these US Hospital Organizations, both Non-Profit and For-Profit ones, should be used to wisely fund a substantial portion of the elimination of the US Government Sequester Cost Cuts over the next several years which are now being negotiated by 29 US Congressional members of the Bicameral Committee Conference on Budget Negotiations.  Both clear-thinking Republicans and clear-thinking Democrats should be on board with this wise funding vehicle.    

And lastly, it is just incredible how much the financial strength of these Arizona Non-Profit Hospitals has been enhanced during the Obama Administration.

From EMMA, below here are the Net Assets of these 3 Arizona Non-Profit Hospital Organizations at the most recent date and also at the beginning of the Obama Administration:

2008 2008 Obama

or or ACA

Most Recent
2009 2009 and

Recent Balance
FYE Balance US Fed

Balance Sheet
Balance Sheet Bump
  City State Sheet Net
Sheet Net %
Hospital Organization HQs HQs Date Assets
Date Assets Change

mil $s

mil $s

Banner Health Phoenix AZ  Sep 13      4,082
Dec 08     1,669 145%
Scottsdale Healthcare Scottsdale AZ Jun 13        689
Sep 09        435 58%
Northern Arizona Healthcare Flagstaff AZ  Sep 13         587
Jun 09        354 66%

Total all 3


     2,458 118%

Yeah, these 3 Arizona Non-Profit Hospital Organizations had their Total Net Assets increase by a massive $2.900 bil to $5.358 bil, an increase of a huge 118% during the Obama Administration so far.  This $2.900 bil Net Asset increase comes predominantly from the tax-free cumulative earnings of these Arizona Hospitals during the Obama Administration.