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

From a review of the Electronic Municipal Market Access (EMMA), I found 11 Non-Profit Hospital Organizations headquartered in the State of New York 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 11 New York 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 York Hospital Organizations
New York and Presbyterian Hospital	New York	Dec 2012	326	3,848	8.5%
Sloan-Kettering Cancer Center	New York	Dec 2012	295	2,789	10.6%
North Shore Long Island Jewish Health	Great Neck	Dec 2012	262	6,702	3.9%
NYU Hospitals Center	New York	Aug 2012	219	1,989	11.0%
Mount Sinai Hospital	New York	Dec 2012	178	1,773	10.0%
Montefiore Medical Center	New York	Dec 2012	163	3,084	5.3%
Icahn School Medicine Mount Sinai	New York	Dec 2012	119	1,578	7.5%
Catholic Health Services Long Island	Rockville Centre	Dec 2012	53	2,056	2.6%
St Peter's Health Partners	Albany	Dec 2012	53	1,070	5.0%
Hospital For Special Surgery	New York	Dec 2012	34	766	4.4%
Albany Medical Center	Albany	Dec 2012	31	935	3.3%
Total all 11			1,733	26,590	6.5%

As you can see in the above chart, the Total Bottom Line Profits for these 11 New York Non-Profit Hospital Organizations was $1.733 bil in the most recent audited fiscal year reported, which was a very solid 6.5% of Total Operating Revenues in the same period.  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.

So how have these New York Non-Profit Hospital Organizations done on the earnings front for the entire period of the Obama Administration so far?

A Non-Profit Hospital Organization's Net Assets, or its Excess of Total Assets over Total Liabilities, results overwhelmingly from the accumulated Tax-free Bottom Line Profits over time.

I could find the audited financial statements of Albany, NY-based St. Peter's Health Partners for only the current fiscal year.  The remaining 10 New York Non-Profit Hospital Organizations had their Total Net Assets increase from $9.077 bil at the beginning of the Obama Administration to $16.902 bil at the most recent date reported, an increase of $7.082 bil, or up a massive 86% over this average 4.38 year period.  Thus for this 4.38 year period, these 10 New York Non-Profit Hospital Organizations generated a Total Average Annual Bottom Line Income of $1.787 bil, higher than the comparable Total Bottom Line Income just in the current fiscal year of $1.680 bil.

So these New York Non-Profit Hospital Organizations have had a very solid earnings performance so far during the Obama Administration.

These very solid bottom line profits of these New York 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 positive earnings story.

When the Insurance Exchanges and Medicaid Expansion both kick in in the State of New York starting in 2014, these New York Non-Profit Hospital Organizations should see their profits increase even more......and by quite a bit more.

Under the Affordable Care Act (ACA), Hospital Organizations' both future Hospital Operating Income and future 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.

Bottom Line Income is a combination of Hospital Operating Income and Non-Operating Income, with the latter being predominantly Investment Returns on Stocks and Bonds.

There are specifically two items which will drive higher Hospital Organization profits due to the ACA and also especially due to US States electing the Expansion of Medicaid.

First, there is the Hospital Operating Statement Provision for Bad Debts' earnings charge which will be dramatically 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 Operating Statement Uncompensated Charity Care Costs' earnings charge for the amounts hospitals spend on charity care which will also be dramatically reduced due to the much improved insurance situation of hospital patients.  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 very large 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 10 New York Non-Profit Hospital Organizations which had Net Assets above $400 mil currently.  I excluded below the Icahn School of Medicine at Mount Sinai.  And I added to these 10 the 4 New York Non-Profit Hospital Organizations I found which had current year Revenues above $1 bil, but with current Net Assets below $400 bil:

				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 York Hospital Organizations
New York City Health & Hospitals		Jun 2012	592	643	1,235	(348)
North Shore Long Island Jewish Health		Dec 2012	98	135	233	98
St. Luke's Roosevelt Hospital		Dec 2012	74	14	88	10
New York and Presbyterian Hospital		Dec 2012	44	33	77	195
Montefiore Medical Center		Dec 2012	16	51	67	100
Mount Sinai Hospital		Dec 2012	24	39	63	79
Catholic Health Services Long Island		Dec 2012	31	19	50	53
St Peter's Health Partners		Dec 2012	41	9	50	31
NYU Hospitals Center		Aug 2012	27	7	34	249
Sloan-Kettering Cancer Center		Dec 2012	18	14	32	91
Winthrop University Hospital Association		Dec 2012	25	7	32	18
Kaleida Health Buffalo		Dec 2012	22	8	30	16
Albany Medical Center		Dec 2012	18	9	27	14
Hospital For Special Surgery		Dec 2012	6	4	10	33
Total all 14			1,036	992	2,028	639
Provision for Bad Debts						1,036
Uncompensated Charity Care Costs						992
Operating Income Excluding Bad Debts and Uncompensated Charity Care Costs						2,667

So, these 14 New York Non-Profit Hospital Organizations had Audited Total Hospital Operating Income of $639 mil in the most recent fiscal year audited.  Driving down this $639 mil Total Hospital Operating Income were Total Provisions for Bad Debts of $1.036 bil and Total Costs of Uncompensated Charity Care of another $992 mil, with the predominant driver of these two earnings charges being the New York City Health and Hospitals Corporation.  Thus, exclusive of these two earnings charges, Total Hospital Operating Income would have been $2.667 bil, which is $2.028 bil higher than the reported $639 mil.
 
Granted these two earnings charges will not be totally eliminated with the ACA and in combination with States like New York choosing to Expand Medicaid, but a substantial amount of these two earnings charges will be eliminated, and especially so because New York elected 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.

It is pretty clear why New York astutely chose to Expand Medicaid, especially since the US Government is 100% funding the first three years of Medicaid Expansion.

With these strong, ongoing New York Non-Profit Hospital earnings under Obamacare, the ultimate result should be a significant reduction in hospital patient charges, a significant bending back of the US Long-term Total Health Care Cost Curve and a significant 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 several 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.