Bottom Line Earnings is a combination of Operating Income and Non-Operating Income, with the latter being due predominantly to Investment Returns.
These 19 large Florida Non-Profit Hospital Organizations generated Audited Total Bottom Line Profits of $2.243 bil in the most recent fiscal year, which was an exceptionally robust 8.6% of their Total Operating Revenues of $26.140 bil.
So what about the smaller Florida Non-Profit Hospital Organizations? How did they do?
From a review of complete audited financial statements and related footnotes in the Electronic Municipal Market Access (EMMA), I found 19 Non-Profit Hospital Organizations headquartered in the State of Florida with Total Operating Revenues of more than $100 mil each in the most recent fiscal year but also with Net Assets of less than $400 mil each.
On the positive side, the Total Bottom Line Earnings of these 19 smaller Florida Non-Profit Hospital Organizations were $250 mil in the most recent fiscal year, up an incredibly off-the-charts 1,150% over the meager $20 mil Total Bottom Line Loss in the prior fiscal year.
But on the negative side, these Total Bottom Line Earnings were only 3.8% of the related Total Operating Revenues for these 19 smaller Florida Non-Profit Hospital Organizations as compared with a much higher 8.6% for the 19 largest ones. A significant portion of these Total Bottom Line Earnings of these 19 smaller Non-Profit Hospital Organizations and a much more significant portion of the 19 largest ones came from Non-Operating items, and predominantly from robust Investment Returns, driven by a stock market which was on fire.
The Total Bottom Line Profits of these 19 smaller Florida Non-Profit Hospital Organizations were a very modest 0.3% of the related Total Operating Revenues in the prior year, when Investment Returns were not robust.
The Public Health Trust of Miami-Dade County, which is overwhelmingly the huge Jackson Hospitals, generated an Operating Loss of a large $339 mil in the fiscal year ended September 2012. This $339 mil Operating Loss was funded predominantly by $202 mil of Sales Tax Revenue and by $133 mil from Miami-Dade County. For the most recent 5 years combined, these Operating Losses totaled a monstrous $2.247 bil. If Medicaid is fully Expanded in Florida as is written in the Affordable Care Act, a substantial portion of these annual losses should go away. And in all fairness, so should the Sales Tax funding it. The individuals paying this huge Sales Tax would have to be very pleased if this were to happen, as would the South Eastern Florida tourism industry. But Medicaid Expansion in Florida is needed for that ongoing Sales Tax to go away.
Below here are the Bottom Line Earnings (Losses) and Total Operating Revenues of each of these 19 smaller Florida Non-Profit Hospital Organizations for each of the most recent two fiscal years:
| Most | Bottom | Bottom | ||||
| Recent | Line | Line | Total | Total | ||
| Annual | Net | Net | Operating | Operating | ||
| Fiscal | Income | Income | Revenues | Revenues | ||
| City | Year | Current | Prior | Current | Prior | |
| HQs | End | Year | Year | Year | Year | |
| mils $s | mils $s | mils $s | mils $s | |||
| Florida Smaller Non-Profit Hospital Organizations | ||||||
| Baptist Health Care | Pensacola | Sep 2013 | 42 | 25 | 690 | 640 |
| Bethesda Health | Boynton Beach | Sep 2012 | 34 | 6 | 282 | 282 |
| Tallahassee Memorial HealthCare | Tallahassee | Sep 2013 | 30 | 40 | 513 | 496 |
| Central Florida Health Alliance | Lady Lake | Jun 2013 | 27 | 20 | 381 | 380 |
| Genesis Health | Jacksonville | Dec 2012 | 24 | (13) | 133 | 123 |
| Shands Jacksonville HealthCare | Jacksonville | Jun 2013 | 16 | 5 | 523 | 515 |
| Mount Sinai Medical Center | Miami Beach | Dec 2012 | 16 | (20) | 497 | 485 |
| Martin Memorial Health | Stuart | Sep 2012 | 15 | 17 | 366 | 360 |
| BRRH Corp | Boca Raton | Jun 2013 | 14 | (10) | 346 | 332 |
| Winter Haven Hospital | Winter Haven | Sep 2012 | 12 | - | 253 | 236 |
| South Lake Hospital | Clermont | Sep 2012 | 11 | 16 | 138 | 134 |
| Public Health Trust Jackson Hosps | Miami | Sep 2012 | 8 | (81) | 1,212 | 1,347 |
| Catholic Health Services | Lauderdale Lakes | Sep 2012 | 8 | 5 | 111 | 108 |
| Christian & Missionary Alliance | Fort Myers | Jun 2013 | 8 | 6 | 106 | 103 |
| Jupiter Medical Center | Jupiter | Sep 2012 | 4 | 5 | 190 | 185 |
| University Medical Service Assoc | Tampa | Jun 2012 | (1) | 3 | 191 | 182 |
| North Brevard County Hospital | Titusville | Sep 2012 | (3) | (9) | 145 | 147 |
| Citrus Memorial Health | Inverness | Sep 2012 | (7) | - | 151 | 154 |
| Munroe Regional Health | Ocala | Sep 2013 | (8) | 5 | 308 | 295 |
| Total all 19 | 250 | 20 | 6,536 | 6,504 | ||
| % Increase Over Prior Year | 1150% | 0% | ||||
| Total Bottom Line Profits as % of Total Operating Revenues | 3.8% | 0.3% | ||||
So, the country's huge and continually expanding income inequality is not just related to very wealthy individuals and everyone else. It also clearly exists in the Non-Profit Hospital arena.
The solution to this massive income inequality in the Non-Profit Hospital arena really isn't that difficult. It's a two-step process.
The first step of the solution is simply for every State to Expand Medicaid. And there shouldn't be a problem with some States being permitted to do a creative disguised Expansion of Medicaid.
Let me show the relevant amounts related to the financial impact of Florida Expanding Medicaid.
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 usually 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 EMMA, below here are the Provisions for Bad Debts and Costs of their Uncompensated Charity Care disclosed in the most recent audited financial statements and related footnotes of each of these 19 smaller Florida Non-Profit Hospital Organizations. Since Public Health Trust of Miami-Dade County predominantly Jackson Memorial Hospitals disclosed $393 mil of Charity Charges Foregone, I very conservatively estimated its Uncompensated Charity Care Costs below at 20% of this $393 mil or $79 mil:
| Most | One Year | One | ||||
| Recent | One Year | Estimated | Year | One | ||
| Annual | Provision | Cost of | Total | Year | ||
| Fiscal | For | Uncompensated | Earnings | Hospital | ||
| City | Year | Bad | Charity | Charge | Operating | |
| HQs | End | Debts | Care | of Both | Income | |
| mils $s | mils $s | mils $s | mils $s | |||
| Florida Smaller Non-Profit Hospital Organizations | ||||||
| Public Health Trust Jackson Hosp | Miami | Sep 2012 | 494 | 79 | 573 | (339) |
| Shands Jacksonville HealthCare | Jacksonville | Jun 2013 | 86 | 39 | 125 | 20 |
| Tallahassee Memorial HealthCare | Tallahassee | Sep 2013 | 81 | 20 | 101 | 32 |
| Baptist Health Care | Pensacola | Sep 2013 | 71 | 29 | 100 | 35 |
| Mount Sinai Medical Center | Miami Beach | Dec 2012 | 68 | 14 | 82 | 16 |
| Bethesda Health | Boynton Beach | Sep 2012 | 51 | 11 | 62 | 4 |
| Munroe Regional Health | Ocala | Sep 2012 | 53 | 5 | 58 | - |
| Martin Memorial Health | Stuart | Sep 2012 | 41 | 10 | 51 | 16 |
| Winter Haven Hospital | Winter Haven | Sep 2012 | 38 | 9 | 47 | 5 |
| Central Florida Health Alliance | Lady Lake | Jun 2013 | 14 | 17 | 31 | 13 |
| North Brevard County Hospital | Titusville | Sep 2012 | 23 | 6 | 29 | 5 |
| Citrus Memorial Health | Inverness | Sep 2012 | 24 | 3 | 27 | (7) |
| South Lake Hospital | Clermont | Sep 2012 | 11 | 5 | 16 | 10 |
| BRRH Corp | Boca Raton | Jun 2013 | 9 | 5 | 14 | - |
| Jupiter Medical Center | Jupiter | Sep 2012 | 9 | 4 | 13 | 4 |
| University Medical Service Assoc | Tampa | Jun 2012 | 8 | 2 | 10 | (2) |
| Catholic Health Services | Lauderdale Lakes | Sep 2012 | 1 | 4 | 5 | 8 |
| Genesis Health | Jacksonville | Dec 2012 | 1 | 2 | 3 | 14 |
| Christian & Missionary Alliance | Fort Myers | Jun 2013 | - | - | - | 5 |
| Total all 19 | 1,083 | 264 | 1,347 | (161) | ||
| Provision for Bad Debts | 1,083 | |||||
| Estimated Costs of Uncompensated Charity Care | 264 | |||||
| Operating Income Excluding Bad Debts and Uncompensated Charity Care Costs | 1,186 | |||||
So, these 19 smaller Florida Non-Profit Hospital Organizations generated Audited Total Hospital Operating Loss of $161 mil in the most recent fiscal year. Causing this $186 mil Total Hospital Operating Loss were Total Provisions for Bad Debts of a massive $1,083 mil and Total Costs of Uncompensated Charity Care of another $264 mil. Thus, exclusive of these two earnings charges, Total Hospital Operating Income would have been $1.186 bil, which is $1.347 bil higher than the reported Hospital Operating Loss of $161 mil.
Now let me focus on a Bottom Line Profit Margin % basis. For all 19 smaller Florida Non-Profit Hospital Organizations combined, the Total Bottom Line Profits were $250 mil in the most recent fiscal year and Total Operating Revenues were $6.536 bil in the most recent year resulting in a 3.8% Profit Margin.
Excluding the above $1.083 mil of Provisions for Bad Debts and the above $264 mil of Uncompensated Charity Care Costs, the Total Bottom Line Profits exclusive of these two charges would be $1.597 bil, which would yield a Profit Margin of 24.4% in the most recent year just for these 19 smaller Florida Non-Profit Hospital Organizations.....yeah, that's more than 6 times the reported 3.8% Profit Margin %.
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 Florida wisely elects to Expand Medicaid, which is the predominant driver of these two earnings charges being very substantially reduced.
Which takes me to the second step of this solution.
There are so many extremely profitable Non-Profit Hospital Organizations all over the country, like the 9 large ones in Florida which generated a Total Bottom Line Profit Margin of 8.6% of Total Operating Revenues in the most recent fiscal year.
These excessive profits have been going on, and compounding, for many years, particularly during the entire period of the Obama Administration, where interest rates have been extremely low and stock market appreciation extremely high.
Further, these highly profitable large Non-Profit Hospital Organizations will also have their already sky-high annual earnings get an additional huge dose of profits from the ACA and especially from the Expansion of Medicaid.
Thus it only makes sense that the clearly excessive past and future profits of these large Non-Profit Hospital Organizations be used in wisely-designed, creative ways to grow the US economy and bring down US unemployment and US underemployment. For instance, a wisely designed, creative removal of these excess profits could be used to finance a substantial portion of the 3 or 4 years elimination of the US sequester budget cuts. And this removal of excess profits could also be used to finance much-needed US infrastructure investments.
The end result of this two-step solution process will be to increase US real GDP growth, to decrease US unemployment and US underemployment, to substantially enhance the financial strength of severely struggling smaller hospitals, to reduce the debt load of both US and State Governments, and to simultaneously substantially bend back the long-term US Total Health Care Cost Curve.
