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:

		Most
		Recent
		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:

		Most
		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
				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
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				25,054			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.