Bottom Line Earnings is a combination of Operating Income and Non-Operating Income, with the latter being due predominantly to Investment Returns.
These 9 large Indiana Non-Profit Hospital Organizations generated Audited Total Bottom Line Profits of $1.921 bil in the most recent fiscal year, which was an off-the-charts 11.5% of their Total Operating Revenues of $16.648 bil.
So what about the smaller Indiana Non-Profit Hospital Organizations? How did they do?
That's one area where the State of Indiana is way ahead of all other States.....every Non-Profit Hospital Organization is required to file its annual audited financial statements at the Indiana State Dept of Health (isdh) website.
Altogether there were 35 Indiana Non-Profit Hospital Organizations with Net Assets below $400 mil each which filed their most recent audited financial statements at the isdh website. In addition, the audited financial statements of the very financially-stressed Indianapolis-based Wishard Health Services were filed with the Electronic Municipal Market Access (EMMA).
On the positive side, the Total Bottom Line Earnings of these 36 smaller Indiana Non-Profit Hospital Organizations were $155.7 mil in the most recent fiscal year, a complete reversal from the $189.3 mil Total Bottom Line Loss in the prior fiscal year.
But on the very negative side, these Total Bottom Line Earnings were only 3.1% of the related Total Operating Revenues for these 36 smaller Indiana Non-Profit Hospital Organizations as compared with 11.5% for the 9 largest ones. A large portion of these Total Bottom Line Earnings of these smaller Non-Profit Hospital Organizations in the most recent year came from Non-Operating items, and predominantly from robust Investment Returns, driven by a stock market which was on fire.
The Total Bottom Line Losses of these 36 smaller Indiana Non-Profit Hospital Organizations were a negative (4.6)% of the related Total Operating Revenues in the prior year, when Investment Returns were not robust. Further, the spread between the positive Total Profit Margin % for the 9 large Indiana Non-Profit Hospital Organizations and the negative (4.6)% Total Loss Margin % for the 36 smaller ones, both in the prior year, was roughly the same as that spread in the most recent year.
And yeah, either Marion County or the State of Indiana, and thus Indiana State taxpayers, have been effectively funding Wishard Health Services' ongoing substantial annual losses, which have totaled $1.063 bil in the most recent five years combined. If Medicaid is fully Expanded in Indiana as is written in the Affordable Care Act, these annual losses of Wishard Health Services that now need to be effectively funded by Indiana taxpayers should go away, for the most part.
Below here are the Bottom Line Earnings (Losses) and Total Operating Revenues of each of these 36 smaller Indiana Non-Profit Hospital Organizations for each of the most recent two fiscal years:
|Indiana Smaller Non-Profit Hospital Organizations|
|Hendricks Regional Health||Danville||Dec 2012||28,772||13,415||279,526||186,096|
|Union Hospital||Terre Haute||Dec 2012||28,419||(463)||430,214||381,080|
|The Methodist Hospitals||Merrillville||Dec 2012||28,216||19,256||330,378||292,874|
|Witham Health Services||Lebanon||Dec 2012||25,857||6,888||264,085||120,176|
|St Joseph Regional Med Ctr||South Bend||Jun 2013||20,942||12,948||373,263||353,077|
|Marion General Hospital||Marion||Jun 2012||17,892||19,862||157,803||144,403|
|Jackson County Schneck Hosp||Seymour||Dec 2012||16,833||11,624||128,233||110,110|
|Reid Hospital||Richmond||Dec 2012||12,787||(19,807)||351,777||294,716|
|Good Samaritan Hospital||Vincennes||Dec 2012||12,651||8,439||191,915||175,001|
|Floyd Memorial Hospital||New Albany||Dec 2012||10,587||1,061||267,005||220,463|
|Columbus Regional Hospital||Columbus||Dec 2012||10,482||6,046||233,046||195,403|
|Hancock Regional Hospital||Greenfield||Dec 2012||10,104||616||124,146||96,861|
|Major Health Partners||Shelbyville||Dec 2012||9,404||3,943||124,590||96,638|
|Memorial Hospital Logansport||Logansport||Dec 2012||8,241||1,457||71,477||57,257|
|Dearborn County Hospital||Lawrenceburg||Dec 2012||7,471||(4,487)||133,436||81,085|
|Memorial Hospital Jasper||Jasper||Jun 2012||6,120||7,120||163,840||150,821|
|Johnson Memorial Hospital||Franklin||Dec 2012||5,178||1,122||120,100||76,999|
|Henry County Hospital||New Castle||Dec 2012||4,436||(423)||102,674||90,357|
|Cameron Community Hospital||Angola||Sep 2012||3,402||(136)||48,079||41,168|
|DeKalb Memorial Hospital||Auburn||Sep 2012||3,312||(1,124)||61,298||49,690|
|Sullivan County Community Hosp||Sullivan||Dec 2012||1,918||691||26,289||26,300|
|Woodlawn Hospital||Rochester||Dec 2012||1,891||133||45,499||38,598|
|Rush Memorial Hospital||Rushville||Dec 2012||1,489||(156)||28,575||20,979|
|Perry County Memorial Hospital||Tell City||Dec 2012||1,308||527||35,601||33,151|
|Fayette Regional Health||Connersville||Sep 2012||915||(1,656)||59,078||56,916|
|Pulaski Memorial Hospital||Winamac||Sep 2012||759||615||21,015||18,930|
|So Indiana Rehabilitation Hosp||New Albany||Dec 2012||642||(29)||18,320||17,357|
|Rehabilitation Hospital Indiana||Indianapolis||Dec 2012||627||877||37,886||39,057|
|Jay County Hospital||Portland||Sep 2012||588||1,260||35,201||32,771|
|Greene County General Hosp||Bloomfield||Dec 2012||36||2,109||24,406||25,852|
|Community Hospital Bremen||Bremen||Apr 2012||(12)||336||14,699||13,916|
|Howard Regional Health||Kokomo||Dec 2012||(88)||(8,410)||80,369||149,134|
|Daviess Community Hospital||Washington||Dec 2012||(1,822)||(3,064)||52,252||45,456|
|Scott Memorial Hospital||Scottsburg||Dec 2012||(2,316)||(3,407)||20,468||18,900|
|Clark Memorial Hospital||Jeffersonville||Dec 2012||(3,348)||(30,441)||172,751||128,058|
|Wishard Health Services||Indianapolis||Dec 2012||(117,966)||(236,027)||380,864||261,819|
|Total all 36||155,727||(189,285)||5,010,158||4,141,469|
|% Increase Over Prior Year||182%||21%|
|Total Bottom Line Profits as % of Total Operating Revenues||3.1%||(4.6)%|
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. Healthy Indiana Plan is not it.....and not even close to being it.
Let me show the relevant amounts related to the financial impact of Indiana 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 the Indiana State Dept of Health website and EMMA, below here are the 31 Indiana Non-Profit Hospital Organizations with Net Assets below $400 mil each and which had a significant amount of their Provisions for Bad Debts and Costs of their Uncompensated Charity Care disclosed in their most recent audited financial statements. Since Wishard Health Services disclosed $333 mil of Charity Charges Foregone, I conservatively estimated its Uncompensated Charity Care Costs below at 20% of this $333 mil or $67 mil:
|mils $s||mils $s||mils $s||mils $s|
|Indiana Smaller Non-Profit Hospital Organizations|
|Wishard Health Services||Indianapolis||Dec 2012||64||67||131||(139)|
|Union Hospital||Terre Haute||Aug 2012||41||13||54||26|
|Reid Hospital||Richmond||Dec 2012||31||10||41||6|
|Clark Memorial Hospital||Jeffersonville||Dec 2012||32||-||32||(1)|
|The Methodist Hospitals||Merrillville||Dec 2012||15||15||30||27|
|Floyd Memorial Hospital||New Albany||Dec 2012||26||-||26||12|
|Hendricks Regional Health||Danville||Dec 2012||21||2||23||26|
|Marion General Hospital||Marion||Jun 2012||15||8||23||13|
|Good Samaritan Hospital||Vincennes||Dec 2012||17||5||22||5|
|Columbus Regional Hospital||Columbus||Dec 2012||15||6||21||8|
|Jackson County Schneck Hosp||Seymour||Dec 2012||18||2||20||14|
|St Joseph Regional Medical Ctr||South Bend||Jun 2013||20||-||20||15|
|Howard Regional Health||Kokomo||Dec 2011||13||4||17||2|
|Witham Health Services||Lebanon||Dec 2012||13||3||16||29|
|Riverview Hospital||Noblesville||Dec 2011||13||3||16||5|
|Major Health Partners||Shelbyville||Dec 2012||11||3||14||6|
|Hancock Regional Hospital||Greenfield||Dec 2012||10||2||12||7|
|Henry County Hospital||New Castle||Dec 2012||10||2||12||-|
|Memorial Hospital Jasper||Jasper||Jun 2012||8||3||11||5|
|Dearborn County Hospital||Lawrenceburg||Dec 2012||9||1||10||5|
|Johnson Memorial Hospital||Franklin||Dec 2012||6||3||9||5|
|Perry County Memorial Hospital||Tell City||Dec 2012||5||2||7||1|
|Fayette Regional Health||Connersville||Sep 2012||6||1||7||1|
|Memorial Hospital Logansport||Logansport||Dec 2012||5||1||6||9|
|DeKalb Memorial Hospital||Auburn||Sep 2012||5||1||6||1|
|Woodlawn Hospital||Rochester||Dec 2012||5||1||6|
|Sullivan Community Hosp||Sullivan||Dec 2012||5||-||5||2|
|Rush Memorial Hospital||Rushville||Dec 2012||5||-||5||1|
|Daviess County Hospital||Washington||Dec 2012||3||1||4||-|
|Greene County General Hospital||Bloomfield||Dec 2012||3||1||4||1|
|Pulaski Memorial Hospital||Winamac||Sep 2012||1||-||1||1|
|Total all 31||451||160||611||93|
|Provision for Bad Debts||451|
|Estimated Costs of Uncompensated Charity Care||160|
|Operating Income Excluding Bad Debts and Uncompensated Charity Care Costs||704|
So, these 31 Indiana Non-Profit Hospital Organizations with Net Assets below $400 mil had Audited Total Hospital Operating Income of only $93 mil in the most recent fiscal year. Driving down this $93 mil Total Hospital Operating Income were Total Provisions for Bad Debts of $451 mil and Total Costs of Uncompensated Charity Care of another $160 mil. Thus, exclusive of these two earnings charges, Total Hospital Operating Income would have been $704 mil, which is $611 mil higher than the reported $93 mil.
Now let me focus on a Bottom Line Profit Margin % basis. For all 36 smaller Non-Profit Hospital Organizations combined, the Total Bottom Line Profits were $155.7 mil and Total Operating Revenues were $5.010 bil in the most recent year resulting in a 3.1% Profit Margin.
Excluding the above $451 mil of Provisions for Bad Debts and the above $160 mil of Uncompensated Charity Care Costs, the Total Bottom Line Profits exclusive of these two charges would be $767 mil, which would yield a Profit Margin of a massive 15.3% in the most recent year for these 36 smaller Indiana Non-Profit Hospital Organizations.....yeah, that's nearly 5 times the reported 3.1% 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 Indiana 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 largest ones in Indiana which generated a Total Bottom Line Profit Margin of 11.5% 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 the 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 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.