New Jersey Non-Profit Hospital Earnings Very Solid Under Obamacare and Headed Much Higher

From a review of the Electronic Municipal Market Access (EMMA), I found 7 Non-Profit Hospital Organizations headquartered in the State of New Jersey with Net Assets at the most recent date reported of more than $400 mil each.  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 7 New Jersey 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
New Jersey Non-Profit Hospital Organizations
Barnabas Health	West Orange	Dec 2012	171	2,530	6.8%
Virtua Health	Marlton	Dec 2012	130	1,137	11.4%
Robert W Johnson Univ Hosp	New Brunswick	Dec 2012	79	780	10.1%
AHS Hospital	Morristown	Dec 2012	75	1,498	5.0%
Meridian Hospitals	Red Bank	Dec 2012	65	1,361	4.8%
Hackensack Univ Medical Ctr	Hackensack	Dec 2012	57	1,348	4.2%
AtlantiCare Regional Med Ctr	Galloway	Dec 2012	57	644	8.9%
Total all 7			634	9,298	6.8%

As you can see in the above chart, the Total Bottom Line Profits for these 7 New Jersey Non-Profit Hospital Organizations was $634 mil in the most recent audited fiscal year reported, which was a robust 6.8% of Total Operating Revenues.  As a comparison, the Combined Bottom Line Profit Margin of the prestigious 30 Dow Industrial companies was 9.6% of their Total Revenues in the most recent year.
 
When you compare the 6.8% Total Bottom Line Profit Margin of these 7 New Jersey 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 New Jersey Non-Profit Hospital Organizations in the most recent year were very solid.

OK, so how much earnings progress have these New Jersey Non-Profit Hospital Organizations made in 2013?  All 7 of these have December fiscal year ends.  From EMMA, these 7 New Jersey Non-Profit Hospital Organizations generated Total Bottom Line Profits of $505 mil in the year-to-date 2013 interim periods disclosed in EMMA, which was up 12% from the prior year comparable periods, as you can see in the following chart:

			2013	2012
			Bottom	Bottom
			Line	Line
	City	Interim	Net	Net	Increase	Increase
	HQs	Period	Income	Income	(Decrease)	(Decrease)
			mils $s	mils $s	Amount	%
New Jersey Hospital Organizations
Barnabas Health	West Orange	9 Months Sept	133	132	1	1%
Virtua Health	Marlton	6 Months Jun	86	76	10	13%
Robert W Johnson Univ Hosp	New Brunswick	9 Months Sept	66	64	2	3%
Meridian Hospitals	Red Bank	9 Months Sept	62	47	15	32%
AHS Hospital	Morristown	9 Months Sept	57	42	15	36%
AtlantiCare Regional Med Ctr	Galloway	9 Months Sept	54	43	11	26%
Hackensack Univ Medical Ctr	Hackensack	9 Months Sept	50	51	(1)	-2%
Total all 7			508	455	53	12%

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 like New Jersey, 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 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 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 7 New Jersey Hospital Organizations which had Net Assets above $400 mil currently.

				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
New Jersey Hospital Organizations
Barnabas Health	West Orange	Dec 2012	109	110	219	150
AHS Hospital	Morristown	Dec 2012	55	151	206	59
Hackensack Univ Medical Ctr	Hackensack	Dec 2012	80	74	154	57
Meridian Hospitals	Red Bank	Dec 2012	72	59	131	53
Virtua Health	Marlton	Dec 2012	52	49	101	47
AtlantiCare Regnl Med Ctr	Galloway	Dec 2012	39	49	88	20
Robert W Johnson Univ Hosp	New Brunswick	Dec 2012	43	36	79	27
Total all 7			450	528	978	413
Provision for Bad Debts						450
Estimated Costs of Uncompensated Charity Care						528
Operating Income Excluding Bad Debts and Uncompensated Charity Care Costs						1,391

So, these 7 New Jersey Hospital Organizations had Audited Total Hospital Operating Income of $413 mil in the most recent fiscal year.  Driving down this $413 mil Total Hospital Operating Income were Total Provisions for Bad Debts of $450 mil and Total Costs of Uncompensated Charity Care of another $528 mil.  Thus, exclusive of these two earnings charges, Total Hospital Operating Income would have been $1.391 bil, which is $978 mil higher than the reported $413 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 if States elect to Expand Medicaid like New Jersey is, 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.

Lastly, it is just incredible how much the financial strength of these New Jersey Non-Profit Hospitals has been enhanced during the Obama Administration.

From EMMA, below here are the Net Assets of these 7 New Jersey Non-Profit Hospital Organizations at June 30, 2013 and also at December 31, 2008, just prior to the beginning of the Obama Administration:

						2008	2008	Obama
				Most		or	or	ACA
			Most	Recent		2009	2009	and
			Recent	Balance		FYE	Balance	US Fed
			Balance	Sheet		Balance	Sheet	Bump
	City	State	Sheet	Net		Sheet	Net	%
Hospital Organization	HQs	HQs	Date	Assets		Date	Assets	Change
				mil $s			mil $s
Virtua Health	Marlton	NJ	Jun 13	1,035		Dec 08	566	83%
AHS (Atlantic Health System) Hospital	Morristown	NJ	Jun 13	966		Dec 08	510	89%
Robert Wood Johnson University Hospital	New Brunswick	NJ	Jun 13	765		Dec 08	457	67%
Meridian Hospitals	Red Bank	NJ	Jun 13	757		Dec 08	339	123%
Hackensack University Medical Center	Hackensack	NJ	Jun 13	593		Dec 08	297	100%
Barnabus Health	West Orange	NJ	Jun 13	515		Dec 08	(290)	278%
AtlantiCare Regional Medical Center	Galloway	NJ	Jun 13	435		Dec 08	262	66%
Total all 7				5,066			2,141	137%

Yeah, these 7 New Jersey Non-Profit Hospital Organizations had their Total Net Assets increase by $2.925 bil to $5.066 bil, an increase of a massive 137% during the Obama Administration so far.  This $2.925 bil Net Asset increase comes predominantly from the tax-free cumulative earnings of these New Jersey Non-Profit Hospitals during the Obama Administration.