These 5 Mississippi Non-Profit Hospital Organizations have not performed well financially. In the most recent fiscal year, their audited Total Bottom Line Earnings were $68 mil, precisely flat with the previous year and only 2.8% of Total Operating Revenues.
These substandard hospital operating results are primarily due to the State of Mississippi suffering severely from a very high uninsured rate, a very high underinsured rate and a very high Medicaid rate.
There is a way out here. While the Affordable Care Act will help, in addition, what Mississippi desperately needs is an Expansion of Medicaid. Then its Non-Profit Hospitals will financially rock.
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.
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 large when compared to the related Hospital Operating Income, and especially so in States where the uninsured percentage and underinsured percentage are high, like is the case in Mississippi.
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 5 Mississippi Non-Profit Hospital Organizations which had Net Assets above $200 mil currently:
So, these 5 Mississippi Non-Profit Hospital Organizations had Audited Total Hospital Operating Income of $32 mil in the most recent fiscal year audited. Weighing on this $32 mil Total Hospital Operating Income were Total Provisions for Bad Debts of $415 mil and Total Costs of Uncompensated Charity Care of another $166 mil. Thus, exclusive of these two earnings charges, Total Hospital Operating Income would have been $613 mil, which is $581 mil higher than the reported $32 mil Hospital Operating Income.
Granted these two earnings charges will not be totally eliminated with the ACA, but a very significant amount of these two earnings charges will be eliminated, and especially so if Mississippi elects to Expand Medicaid, which is the predominant driver of these two earnings charges being very substantially reduced.
And the above two large earnings charges are just for one year.
I really don't understand how a financially savvy State Governor and financially savvy State Legislatures could possibly vote to not Expand Medicaid. The US Government is 100% funding the first three years of Medicaid Expansion.
Further, if Medicaid is Expanded, the Hospital Organizations will be getting these just huge increases in their annual earnings in each future year, which will ultimately accrue to the benefit of State citizens when they are hospitalized and will be paying much lower hospital charges. It will also cut the US Debt markedly since the US Government is paying for a good chunk of these hospitalization charges.
I really can't understand why some State Governors and State Legislators would want to financially hammer their State Hospital Organizations, their State citizens and the US Government Debt load like this.
Very financially astute Republican State Governors like Ohio's John Kasich and Florida's Rick Scott, who also has a particularly keen insight on this issue since he was formerly a CEO of a large hospital organization, already have this all figured out. And so has the perceptive US stock market which has moved up dramatically the market prices of the common stocks of the Publicly-Held Hospital Organizations.