Michigan Non-Profit Hospital Earnings Up 221% in the Most Recent Year Under Obamacare and Headed Much Higher

From a review of the Electronic Municipal Market Access (EMMA), I found 12 Non-Profit Hospital Organizations headquartered in the State of Michigan with Net Assets at the most recent date reported of more than $400 mil each.  The prestigious University of Michigan Hospital & Health has not disclosed its June 2013 key financial information yet.  Below here are the Bottom Line Profits in the most recent two audited fiscal years reported for each of the other 11 Michigan 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
Michigan Non-Profit Hospital Organizations
Trinity Health	Livonia	Jun 2013	666	150	516	344%
Spectrum Health	Grand Rapids	Jun 2013	318	81	237	293%
McLaren Health	Flint	Sep 2012	170	31	139	448%
Beaumont Hospital	Royal Oak	Dec 2012	109	36	73	203%
Sparrow Health	Lansing	Dec 2012	79	45	34	76%
Lakeland Hospitals	St Joseph	Sep 2012	58	24	34	142%
Henry Ford Health	Detroit	Dec 2012	55	65	(10)	-15%
Bronson Healthcare	Kalamazoo	Dec 2012	42	21	21	100%
Munson Healthcare	Traverse City	Jun 2013	42	23	19	83%
Oakwood Healthcare	Dearborn	Dec 2012	40	17	23	135%
MidMichigan Health	Midland	Jun 2013	24	7	17	243%
Total all 11			1,603	500	1,103	221%

Note:  Both Trinity Health and McLaren Health Bottom Line Net Income are exclusive of Contribution Alliance Gains.

Yeah, these 11 Michigan Non-Profit Hospital Organizations generated Total Bottom Line Profits of $1.603 bil in the most recent fiscal year, which was a massive $1.103 bil increase, or an off-the-charts 221% increase, over the previous fiscal year.

But there's more to this earnings story.

When the Insurance Exchanges kick in starting in 2014, these Michigan Non-Profit Hospital Organizations should see their profits increase even 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 Michigan is wisely Expanding Medicaid, the profits of all Michigan 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.

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 the 11 Michigan Non-Profit Hospital Organizations which had Net Assets above $400 mil currently.

Michigan has more of the huge St. Louis, Missouri headquartered Ascension Health total hospital beds than any other State.  These Michigan beds are mostly in Detroit and Flint.  In total, Michigan has 20.9% of Ascension Health's available hospital beds and thus also included below is a 20.9% Michigan allocation of Ascension Health's consolidated amounts.

				One Year	One
			One Year	Estimated	Year	One
		Most	Provision	Cost of	Total	Year
		Recent	For	Uncompensated	Earnings	Hospital
	City	Annual	Bad	Charity	Charge	Operating
	HQs	FYE	Debts	Care	of Both	Income
			mils $s	mils $s	mils $s	mils $s
Michigan Hospital Organizations
Trinity Health	Livonia	Jun 2013	480	183	663	305
Mich 20.9% of Ascension Beds	Various	Jun 2013	245	110	355	83
Henry Ford Health	Detroit	Dec 2012	159	61	220	55
McLaren Health	Flint	Sep 2012	114	22	136	60
Oakwood Healthcare	Dearborn	Dec 2012	98	19	117	21
Spectrum Health	Grand Rapids	Jun 2013	77	23	100	212
Sparrow Health	Lansing	Dec 2012	73	18	91	31
Beaumont Hospital	Royal Oak	Dec 2012	71	9	80	58
Bronson Healthcare	Kalamazoo	Dec 2012	40	21	61	26
MidMichigan Health	Midland	Jun 2013	37	4	41	5
Munson Healthcare	Traverse City	Jun 2013	21	6	27	22
Lakeland Hospitals	St Joseph	Sep 2012	19	6	25	21
Total all 12			1,434	482	1,916	899
Provision for Bad Debts						1,434
Estimated Costs of Uncompensated Charity Care						482
Operating Income Excluding Bad Debts and Uncompensated Charity Care Costs						2,815

So, these 12 Hospital Organizations had Audited Total Hospital Operating Income of $899 mil in the most recent fiscal year.  Driving down this $899 mil Total Hospital Operating Income were Total Provisions for Bad Debts of a huge $1.434 bil and Total Costs of Uncompensated Charity Care of another $482 mil.  Thus, exclusive of these two earnings charges, Total Hospital Operating Income would have been $2.815 bil, which is $1.916 bil higher than the reported $899 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 Michigan 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 Michigan 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.