Tuesday, November 12, 2013

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

From a review of the Electronic Municipal Market Access (EMMA), I found 16 Non-Profit Hospital Organizations headquartered in the State of Illinois 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 16 Illinois Non-Profit Hospital Organizations:



Annual Bottom

Fiscal Line Total Profit

City Year Net Operating Margin

HQs End Income Revenues %

mils $s mils $s
Illinois Hospital Organizations

Advocate Health Care Oak Brook Dec 2012          672             4,599 14.6%
Northwestern Memorial Health Care Chicago Aug 2013          309             1,710 18.1%
NorthShore University Health System Evanston Sep 2012          192             1,756 10.9%
Hospital Sisters Health System Springfield Jun 2013          168             2,008 8.4%
OSF Healthcare System Peoria Sep 2012          159             1,909 8.3%
Presence Health Chicago Dec 2012          152             2,740 5.5%
Cadence Health Winfield Jun 2013          147             1,127 13.0%
University Chicago Medical Center Chicago Jun 2013          141             1,337 10.5%
Rush University Medical Center Chicago Jun 2013          111             1,838 6.0%
Memorial Health System Springfield Sep 2012            93               755 12.3%
Children's Hospital Chicago Med Ctr Chicago Aug 2012            72               712 10.1%
Alexian Brothers Health System Arlington Heights Jun 2013            65               994 6.5%
Northwest Community Healthcare Arlington Heights Sep 2012            57               493 11.6%
Little Company Mary Hosps&Health Care Evergreen Jun 2013            54               199 27.1%
St George Palos Heights Dec 2012            47               375 12.5%
Edward Health Services Naperville Jun 2012            15               586 2.6%

Total all 16

      2,454           23,138 10.6%

As you can see in the above chart, the Total Bottom Line Profits for these 16 Illinois Non-Profit Hospital Organizations was $2.454 bil in the most recent audited fiscal year reported, which was an exceptionally robust 10.6% of Total Operating Revenues.  As a comparison, the Combined Bottom Line Profit Margin of the prestigious 30 Dow Industrial companies is a much 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 shaking their heads at how Non-Profit Hospitals can be doing so well on the profit margin percentage front.

When you compare the 10.6% Total Bottom Line Profit Margin of these 16 Illinois 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 Illinois 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 exceptionally strong bottom line profits of these 16 Illinois 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 Illinois 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 Illinois 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 ideally the next 3 to 4 years which are now being negotiated by 29 US Congressional members of the Bilateral and Bicameral Committee Conference on Budget Negotiations.  Both clear-thinking Republicans and clear-thinking Democrats should be on board with this wise funding vehicle.