|mils $s||mils $s||mils $s|
|Missouri Non-Profit Hospital Organizations|
|Ascension Health||Edmundson||Jun 2013||1,123||657||466||71%|
|BJC Healthcare||St Louis||Dec 2012||362||158||204||129%|
|Mercy Health||Chesterfield||Jun 2012||299||251||48||19%|
|SSM HealthCare||St Louis||Dec 2012||206||(39)||245||628%|
|Children's Mercy Hospitals||Kansas City||Jun 2012||82||40||42||105%|
|St Luke's Health System||Kansas City||Dec 2012||65||30||35||117%|
|Heartland Regional Medical Center||St Joseph||Jun 2013||61||39||22||56%|
|Saint Francis Medical Center||Cape Girardeau||Jun 2013||48||40||8||20%|
|North Kansas City Hospital||Kansas City||Jun 2013||7||31||(24)||-77%|
|Total all 10||2,371||1,274||1,097||86%|
As you can see in the above chart, these 10 Missouri Non-Profit Hospital Organizations generated Total Bottom Line Profits of $2.371 bil in the most recent fiscal year, up an exceptionally robust 86% from the previous year.
And from a review of the Electronic Municipal Market Access (EMMA), 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 10 Missouri Non-Profit Hospital Organizations:
|mils $s||mils $s|
|Missouri Hospital Organizations|
|Ascension Health||Edmundson||Jun 2013||1,123||17,097||6.6%|
|BJC Healthcare||St Louis||Dec 2012||362||3,849||9.4%|
|Mercy Health||Chesterfield||Jun 2012||299||4,113||7.3%|
|SSM HealthCare||St Louis||Dec 2012||206||3,327||6.2%|
|Children's Mercy Hospitals||Kansas City||Jun 2012||82||1,123||7.3%|
|St Luke's Health System||Kansas City||Dec 2012||65||1,237||5.3%|
|Heartland Regional Medical Center||St Joseph||Jun 2013||61||550||11.1%|
|Saint Francis Medical Center||Cape Girardeau||Jun 2013||48||427||11.2%|
|North Kansas City Hospital||Kansas City||Jun 2013||7||433||1.6%|
|Total all 10||2,371||33,175||7.1%|
As you can see in the above chart, the Total Bottom Line Profits for these 10 Missouri Non-Profit Hospital Organizations was $2.371 bil in the most recent audited fiscal year reported, which was a very robust 7.1% of Total Operating Revenues. As a comparison, the Combined Bottom Line Profit Margin of the prestigious 30 Dow Industrial companies is just a bit higher 9.6% of their Total Revenues in the most recent year.
The Big 3 Missouri Non-Profit Hospital Organizations have all generated higher Bottom Line Profit Margin %s since their most recent fiscal year. The giant Ascension Health registered a Profit Margin of 9.4% in its most recent September 2013 quarter, up markedly from its Profit Margin of 6.6% earned in its June 2013 fiscal year end. BJC Healthcare posted a Profit Margin of 10.5% in the most recent 9 months ended September 2013, up a bit from its Profit Margin of 9.4% earned in its year ended December 2012. And Mercy Health registered a Profit Margin of 11.5% in its most recently reported 9 months ended March 2013, up substantially from its Profit Margin of 7.3% earned in its June 2012 fiscal year end.
The driver of this 7.1% Profit Margin in the most recent year was Ascension Health, which comprises roughly half of both the Profits and Revenues of all 10 of these Missouri Non-Profit Hospital Organizations combined. Ascension generated a Profit Margin of 6.6%, but this excludes the massive $2.022 bil Economic Gain from its Hospital Business Combinations in the most recent fiscal year.
When you compare the 7.1% Total Bottom Line Profit Margin of these 11 Missouri 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 Missouri Hospital Organizations in the most recent year were on fire, especially since the Total Bottom Line Earnings of these Hospitals increased a very robust 86% in the most recent year over the previous year.
These very solid bottom line profits of these 11 Missouri 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 much more to this earnings story.
When the Insurance Exchanges kick in starting in 2014, these Missouri Non-Profit Hospital Organizations should see their profits increase by much 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.
Bottom Line Income is a combination of Hospital Operating Income and Non-Operating Income, with the latter being predominantly Investment Returns.
There are specifically two items which will drive higher Hospital Organization profits due to the ACA.
First, there is the Provision for Bad Debts' earnings charge which will be significantly reduced due to the substantially better insurance situation of hospital patients due to the ACA. 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 Uncompensated Charity Care Costs' earnings charge for the amounts hospitals spend on charity care which will also be significantly reduced. This Estimated Costs for Uncompensated Charity Care is usually disclosed in a Hospital Organization's footnotes which accompany its audited financial statements.
But to supercharge the Hospital Profit improvement, the key is to maximize the number of Missouri residents who will switch from being uninsured to insured and who will switch from being underinsured to much better insured. And the best supercharged fuel here to make this happen is for the State of Missouri and other US States to elect to Expand Medicaid. US States with a very high number of uninsured and underinsured are the ones whose future Hospital Earnings have the best shot of exploding upwardly if Medicaid is Expanded.
So what about the amounts of these two items.....Provision for Bad Debts and Uncompensated Charity Care Costs? Well, they are very large when compared to the related Hospital Operating Income.
When you think of the giant Ascension Health, you first think of Missouri. But you know what? Only 2% of Ascension Health's combined available acute hospital beds are located in Missouri. There are many US States that haven't elected to Expand Medicaid where many of Ascension Health's available acute hospital beds are located, as follows: Indiana has 13% of Ascension Health's beds, Texas 11%, Florida 10%, and Tennessee and Alabama both have 9%. In total, 63% of Ascension Health's beds are in US States which haven't elected to Expand Medicaid.
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 9 of the above Missouri Non-Profit Hospital Organizations which had Net Assets above $400 mil currently. I excluded below the Kansas City-based Children's Mercy Hospitals:
|mils $s||mils $s||mils $s||mils $s|
|Missouri Hospital Organizations|
|Ascension Health Alliance||Jun 2013||1,173||525||1,698||397|
|Mercy Health||Jun 2012||268||127||395||122|
|SSM Health Care||Dec 2012||157||95||252||58|
|BJC Healthcare||Dec 2012||90||145||235||163|
|St Luke's Health (KC)||Dec 2012||49||36||85||32|
|Saint Francis Medical Center||Jun 2013||60||3||63||40|
|Heartland Regional Med Ctr||Jun 2013||41||13||54||29|
|North Kansas City Hospital||Jun 2012||25||8||33||15|
|Total all 9||1,945||978||2,923||882|
|Provision for Bad Debts||1,945|
|Uncompensated Charity Care Costs||978|
|Operating Income Excluding Bad Debts and Uncompensated Charity Care Costs||3,805|
So, these 9 Missouri Non-Profit Hospital Organizations had Audited Total Hospital Operating Income of $0.882 bil in the most recent fiscal year audited. Driving down this $0.882 bil Total Hospital Operating Income were Total Provisions for Bad Debts of $1.945 bil and Total Costs of Uncompensated Charity Care of another $0.978 bil. Thus, exclusive of these two earnings charges, Total Hospital Operating Income would have been $3.805 bil, which is massive $2.923 bil higher than the reported $0.882 bil.
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. The percentage of these two charges eliminated will not be nearly as high in Missouri since it has chosen not to expand Medicaid as it will be in the States electing to expand Medicaid. But it will still be a very significant percentage reduction in Missouri.
And the above two earnings charges are just for one year.
With these very strong, ongoing Missouri 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. And if Missouri and other US States eventually see the light and elects to Expand Medicaid, after all there is virtually no cost to the State for Expanding Medicaid, the ultimate result should be a substantial reduction in hospital patient charges, a very significant bending back of the US Long-term Total Health Care Cost Curve and a substantial 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 ideally over the next 3 to 4 years which are now being negotiated by 29 US Congressional members of the Bicameral Committee Conference on Budget Negotiations. Both clear-thinking Republicans and clear-thinking Democrats should be on board with this wise funding vehicle.
In addition, I added below an allocation of 8.6% of Ascension Health's consolidated amounts based on the 8.6% of Ascension Health's total available acute hospital beds located in Alabama, 8.7% of For-Profit Community Health Systems consolidated amounts based on the 8.7% of Community Health System's total licensed beds located in Alabama, and 4.8% of For-Profit Tenet Health Care's consolidated amounts