Thursday, November 14, 2013

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

From a review of the Electronic Municipal Market Access (EMMA), I found 16 Non-Profit Hospital Organizations headquartered in the State of Pennsylvania with Net Assets at the most recent date reported of more than $400 mil each.  Pittsburgh-based UPMC with a gigantic $4.257 bil of Insurance Enrollment Revenue in the most recent fiscal year is much unlike the other 15.  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 the other 15 Pennsylvania Non-Profit Hospital Organizations:



Annual Bottom

Fiscal Line Total Profit

City Year Net Operating Margin

HQs End Income Revenues %

mils $s mils $s
Pennsylvania Non-Profit Hospital Organizations

Catholic Health East Newtown Square Dec 2012          383       4,235 9.0%
Jefferson Health Radnor Jun 2013          304       3,047 10.0%
Geisinger Health Danville Jun 2013          302       3,355 9.0%
University Penn Health Philadelphia Jun 2013          296       3,501 8.5%
Children's Hospital Philadelphia Jun 2013          290       2,075 14.0%
WellSpan Health York Jun 2013          123       1,237 9.9%
Reading Hospital West Reading Jun 2013          110          913 12.0%
Lancaster General Health Lancaster Jun 2013          101          920 11.0%
Pinnacle Health Harrisburg Jun 2013            77          831 9.3%
Guthrie Health Sayre Jun 2013            61          576 10.6%
Lehigh Valley Health Allentown Jun 2013            60       1,562 3.8%
St Luke's Univ Health Bethlehem Jun 2013            42       1,122 3.7%
Abington Health Abington Jun 2013            36          784 4.6%
Susquehanna Health Williamsport Jun 2013            26          472 5.5%
Albert Einstein Healthcare Philadelphia Jun 2013             (8)       1,057 -0.8%

Total all 15

      2,203      25,687 8.6%

As you can see in the above chart, the Total Bottom Line Profits for these 15 Pennsylvania Non-Profit Hospital Organizations was $2.203 bil in the most recent audited fiscal year reported, which was a very robust 8.6% of Total Operating Revenues.  As a comparison, the Combined Bottom Line Profit Margin of the prestigious 30 Dow Industrial companies was just a little bit higher 9.6% of their Total Revenues in the most recent year.  CEOs and CFOs of the 30 Dow Industrial companies keenly aware of how difficult it is for them to generate profit margin percentages must be in utter disbelief at how Non-Profit Hospitals can possibly be doing so well on the profit margin percentage front.

When you compare the 8.6% Total Bottom Line Profit Margin of these 15 Pennsylvania 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 Pennsylvania 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, coupled with consistently choosing Hospitals over People, it's no wonder why the approval rating of the US Congress is now less than 10%.

OK, so how much earnings progress have these Pennsylvania Non-Profit Hospital Organizations made in the most recent fiscal year?  All of these 15 but Catholic Health East have as their most recent year the fiscal year ended June 30, 2013.  And so does UPMC.  From EMMA, these 16 Pennsylvania Non-Profit Hospital Organizations generated Audited Total Bottom Line Profits of $2.562 bil in the most recent fiscal year, which was an exceptionally robust 52% above the prior fiscal year, as you can see in the following chart:


Recent Prior

Year Year

Bottom Bottom

Line Line

City Net Net Increase Increase

HQs Income Income (Decrease) (Decrease)

mils $s mils $s Amount %
Pennsylvania Non-Profit Hospital Organizations

Catholic Health East Newtown Square            383          252          131 52%
UPMC Pittsburgh            359          221          138 62%
Jefferson Health Radnor            304          233            71 30%
Geisinger Health Danville            302          200          102 51%
University Penn Health Philadelphia            296          255            41 16%
Children's Hospital Philadelphia            290          139          151 109%
WellSpan Health York            123            16          107 669%
Reading Hospital West Reading            110            13            97 746%
Lancaster General Health Lancaster            101            50            51 102%
Pinnacle Health Harrisburg              77            50            27 54%
Guthrie Health Sayre              61            30            31 103%
Lehigh Valley Health Allentown              60          132           (72) -55%
St Luke's Univ Health Bethlehem              42            34              8 24%
Abington Health Abington              36            30              6 20%
Susquehanna Health Williamsport              26            15            11 73%
Albert Einstein Healthcare Philadelphia              (8)            17           (25) -147%

Total all 16
        2,562       1,687          875 52%

These very strong bottom line profits of these Pennsylvania 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 Pennsylvania 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.  It appears that Pennsylvania is making the wise move, both morally and fiscally, to Expand Medicaid in its State.  This action will dramatically increase the profits of all Pennsylvania Hospitals, both Non-Profit ones and For-Profit ones like Universal Health Services, by substantially reducing the huge earnings charges related to both Bad Debts and Charity Care.

With these very strong, ongoing Pennsylvania 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 the next say 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 is just incredible how much the financial strength of these Pennsylvania Non-Profit Hospitals has been enhanced during the Obama Administration.

From EMMA, below here are the Net Assets of these 16 Pennslvania Non-Profit Hospital Organizations at the most recent date and also at the beginning of the Obama Administration:

2008 2008 Obama

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

UPMC Pittsburgh PA Jun 13     4,617
Jun 09     2,756 68%
Catholic Health East Newtown Square PA  Jun 13      3,631
Dec 08     1,978 84%
Children's Hospital Philadelphia Philadelphia PA  Jun 13      2,897
Jun 09     1,938 49%
Jefferson Health System Radnor PA  Jun 13      2,872
Jun 09     1,860 54%
Geisinger Health System Danville PA Jun 13     2,044
Jun 09        901 127%
University Penn Health System Philadelphia PA Jun 13     2,041
Jun 09     1,163 75%
Lehigh Valley Health Network Allentown PA Jun 13     1,066
Jun 09        590 81%
Lancaster General Health Lancaster PA Jun 13        942
Jun 09        622 51%
Reading Hospital West Reading PA Jun 13        895
Jun 09        730 23%
Abington Health Abington PA Jun 13        764
Jun 09        518 47%
WellSpan Health York PA Jun 13        659
Jun 09        387 70%
Guthrie Health Sayre PA Jun 13        624
Jun 09        375 66%
Pinnacle Health System Harrisburg PA Jun 13        566
Jun 09        304 86%
Albert Einstein Healthcare Network Philadelphia PA Jun 13        525
Jun 09        401 31%
St Luke's University Health Network Bethlehem PA Jun 13        475
Jun 09        298 59%
Susquehanna Health System Williamsport PA Jun 13        436
Jun 09        226 93%

Total all 16


  15,047 67%

Yeah, these 16 Pennsylvania Non-Profit Hospital Organizations had their Total Net Assets increase by a massive $10.007 bil to $25.054 bil, an increase of 67% during the Obama Administration so far.  This $10.007 bil Net Asset increase comes predominantly from the tax-free cumulative earnings of these Pennsylvania Hospitals during the Obama Administration.