Kentucky Non-Profit Hospital Earnings Up 53% Under Obamacare and Headed Substantially Higher

From a review of the Electronic Municipal Market Access (EMMA), I found 6 Non-Profit Hospital Organizations headquartered in the State of Kentucky with Net Assets at the most recent date reported of more than $200 mil each.  Below here are the Bottom Line Profits in the most recent two audited fiscal years reported for each of these Kentucky Non-Profit Hospital Organizations:

			Most
		Most	Recent	Prior
		Recent	Year	Year
		Annual	Bottom	Bottom
		Fiscal	Line	Line	Increase	Increase
	City	Year	Net	Net	(Decrease)	(Decrease)
	HQs	End	Income	Income	Amount	%
			mils $s	mils $s	mils $s
Kentucky Non-Profit Hospital Organizations
Saint Elizabeth Medical Ctr	Louisville	Dec 2012	132	64	68	106%
Baptist Healthcare	Louisville	Aug 2012	96	85	11	13%
Norton Healthcare	Louisville	Dec 2012	57	29	28	97%
Commonwealth Health	Bowling Green	Mar 2013	34	25	9	36%
Ashland Hospital	Ashland	Sep 2012	30	4	26	650%
Owensboro Medical Health	Owensboro	May 2013	1	22	(21)	-95%
Total all 6			350	229	121	53%

Yeah, these 6 Kentucky Non-Profit Hospital Organizations generated Total Bottom Line Profits of $350 mil in the most recent fiscal year, which was a $121 mil increase, or a very robust 53% increase, over the previous fiscal year.
 
And 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 Kentucky Non-Profit Hospital Organizations: 

		Most
		Recent
		Annual	Bottom
		Fiscal	Line	Total	Profit
	City	Year	Net	Operating	Margin
	HQs	End	Income	Revenues	%
			mils $s	mils $s
Kentucky Non-Profit Hospital Organizations
Saint Elizabeth Medical Ctr	Louisville	Dec 2012	132	965	13.7%
Baptist Healthcare	Louisville	Aug 2012	96	1,647	5.8%
Norton Healthcare	Louisville	Dec 2012	57	1,675	3.4%
Commonwealth Health	Bowling Green	Mar 2013	34	365	9.3%
Ashland Hospital	Ashland	Sep 2012	30	553	5.4%
Owensboro Medical Health	Owensboro	May 2013	1	429	0.2%
Total all 6			350	5,634	6.2%

As you can see in the above chart, the Total Bottom Line Profits for these 6 Kentucky Non-Profit Hospital Organizations was $350 mil in the most recent audited fiscal year reported, which was a very solid 6.2% of Total Operating Revenues.  As a comparison, the Combined Bottom Line Profit Margin of the prestigious 30 For-Profit Dow Industrial companies was 9.6% of their Total Revenues in the most recent year.

But there's substantially more to this earnings story.

When the Insurance Exchanges kick in starting in 2014, these Kentucky Non-Profit Hospital Organizations should see their profits increase by substantially 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.  And since Kentucky is wisely Expanding Medicaid, the profits of all Kentucky Hospitals will be substantially increased by reducing the huge earnings charges related to both Bad Debts and Charity Care.

So what about the amounts of these two items.....Bad Debts and Uncompensated Charity Care?  Well, they are very large, especially when compared to the related Hospital Operating Income, and especially in States with very high percentages of uninsured and underinsured citizens like Kentucky.

From a review of the Electronic Municipal Market Access (EMMA), below here are the most recent audited year's Provision for Bad Debts and Uncompensated Charity Care Costs for these 6 Kentucky Non-Profit Hospital Organizations which had Net Assets above $200 mil currently.  And I added an estimate of the Huge KentuckyOne Health based on its 18% Total Operating Revenues portion of Catholic Health Initiative's Consolidated Total Operating Revenues.

				One Year	One
			One Year	Estimated	Year	One
		Most	Provision	Cost of	Total	Year
		Recent	For	Uncompensated	Earnings	Hospital
		Annual	Bad	Charity	Charge	Operating
		FYE	Debts	Care	of Both	Income
			mils $s	mils $s	mils $s	mils $s
Kentucky Hospital Organizations
KentuckyOne Health		June 2013	148	58	206	(10)
Baptist Healthcare		Aug 2012	60	61	121	23
Norton Healthcare		Dec 2012	79	20	99	19
Saint Elizabeth Medical Ctr		Dec 2012	56	33	89	65
Ashland Hospital		Sep 2012	57	21	78	10
Owensboro Medical Health		May 2013	33	14	47	(20)
Commonwealth Health		Mar 2013	25	16	41	29
Total all 7			458	223	681	116
Provision for Bad Debts						458
Uncompensated Charity Care Costs						223
Operating Income Excluding Bad Debts and Uncompensated Charity Care Costs						797

So, these 7 Kentucky Hospital Organizations had Audited Total Hospital Operating Income of $116 mil in the most recent fiscal year.  Driving down this $116 mil Total Hospital Operating Income were Total Provisions for Bad Debts of $458 mil and Total Costs of Uncompensated Charity Care of another $223 mil.  Thus, exclusive of these two earnings charges, Total Hospital Operating Income would have been $797 mil, which is $681 mil higher than the reported $116 mil.
 
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 since Kentucky is electing to Expand Medicaid, which is the predominant driver of these two earnings charges being very substantially reduced.

And the above two earnings charges are just for one year.

With these very strong, ongoing Kentucky Non-Profit 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 say 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.