Tuesday, November 12, 2013

Oregon Non-Profit Hospital Earnings On Fire Under Obamacare and Headed Much Higher

From a review of the Electronic Municipal Market Access (EMMA), I found 3 Non-Profit Hospital Organizations headquartered in the State of Oregon 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 3 Oregon Non-Profit Hospital Organizations:



Annual Bottom

Fiscal Line Total Profit

City Year Net Operating Margin

HQs End Income Revenues %

mils $s mils $s
Oregon Hospital Organizations

Oregon Health & Science Univ Portland Jun 2013          208             2,170 9.6%
Asante Health Medford Sep 2012            90               517 17.4%
Legacy Health Portland Mar 2013            89             1,365 6.5%

Total all 3

         387             4,052 9.6%

As you can see in the above chart, the Total Bottom Line Profits for these 3 Oregon Non-Profit Hospital Organizations was $387 mil in the most recent audited fiscal year reported, which was a very robust 9.6% of Total Operating Revenues.  As a comparison, the Combined Bottom Line Profit Margin of the prestigious 30 Dow Industrial companies was precisely the same 9.6% of their Total Revenues in the most recent year.  CEOs of the 30 Dow Industrial companies keenly aware of how difficult it is for them to generate profit margin percentages must be shaking their heads at how Non-Profit Hospitals can be doing so well on the profit margin percentage front.

When you compare the 9.6% Total Bottom Line Profit Margin of these 3 Oregon Non-Profit Hospital Organizations with the same 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 Oregon Non-Profit Hospital Organizations in the most recent year were on fire.

But it also reveals a main reason why the US Health Care Costs are so much out of control.....Hospitals charge way too much and retain these excess charges in their Bottom Line Profits which get added to their massive treasure chest of Investments in Stocks and Bonds.  And the US Congress, both Republicans and Democrats, nearly all 100% subservient to Hospitals, just sits there and twiddles its thumbs and refuses to work together for the common good of the country.  With this complete lack of governance, it's no wonder why the approval rating of the US Congress is now less than 10%.

These very strong bottom line profits of these 3 Oregon 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 even more to this incredibly positive earnings story.

When the Insurance Exchanges kick in starting in 2014, these Oregon 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 robustly due to many of the Uninsured getting insurance and also due to the many of the Underinsured getting much better insurance.

With these very exceptionally strong, ongoing Oregon 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 ideally the next 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.

It should also be pointed out that from an examination of Seattle area-headquartered Non-Profit Hospital Organization Providence Health & Services' most recent audited financial statements included in the Electronic Municipal Market Access (EMMA), there was a Supplementary Section that broke down Providence Health's Operating Statement by State.

The Bottom Line Profits of the Oregon Region of Providence Health were $158 mil in the the most recent year ended December 31, 2012, which was 6.3% of Total Operating Revenues generated in 2012 of $2.515 bil.