Bottom Line Earnings is a combination of Operating Income and Non-Operating Income, with the latter being due predominantly to Investment Returns.
These 16 Large Texas Non-Profit Hospital Organizations generated Audited Total Bottom Line Profits of $2.759 bil in the most recent fiscal year, which was a very robust 9.1% of their Total Operating Revenues of $30.350 bil.
So what about the Texas County District Hospitals and the smaller Texas Non-Profit Hospital Organizations? How did they do?
From a review of audited financial statements in the Electronic Municipal Market Access (EMMA), I found 21 Texas County District Hospital Organizations headquartered with Total Operating Revenues of more than $10 mil each in the most recent fiscal year.
These 21 Texas County District Hospitals Organizations generated Total Bottom Line Earnings of $129 mil in the most recent fiscal year, which was down 39% from the prior year and a very modest 2.9% of Total Operating Revenues.
But this story of dismal Texas County District Hospital earnings gets much worse. In the most recent fiscal year, their Total Operating Losses were a massive $1.604 bil. Property Tax Revenues provided the dominant funding vehicle for these Operating Losses and turned this Total Operating Loss of $1.604 bil into a modest Total Bottom Line Profit of $129 mil, nearly all of which was related to the Bexar County San Antonio Hospital Organization.
Below here are the Bottom Line Earnings (Losses) and Total Operating Revenues of each of these 21 Texas County District Hospital Organizations for each of the most recent two fiscal years:
| Most | Bottom | Bottom | ||||
| Recent | Line | Line | Total | Total | ||
| Annual | Net | Net | Operating | Operating | ||
| Fiscal | Income | Income | Revenues | Revenues | ||
| City | Year | Current | Prior | Current | Prior | |
| HQs | End | Year | Year | Year | Year | |
| mils $s | mils $s | mils $s | mils $s | |||
| Texas County District Hospitals | ||||||
| Bexar | San Antonio | Dec 2012 | 100 | 76 | 773 | 705 |
| Dallas (Parkland) | Dallas | Sep 2012 | 33 | 106 | 1,235 | 1,208 |
| Midland | Midland | Sep 2012 | 15 | (4) | 231 | 209 |
| Tarrant | Fort Worth | Sep 2012 | 14 | 3 | 442 | 420 |
| Scurry | Snyder | Dec 2012 | 5 | 5 | 20 | 21 |
| Wilson | Floresville | Sep 2012 | 4 | 1 | 22 | 19 |
| Andrews | Andrews | Sep 2012 | 3 | 4 | 24 | 24 |
| Dawson | Lamesa | Mar 2012 | 3 | 2 | 17 | 18 |
| Ector | Odessa | Sep 2012 | 3 | (2) | 211 | 215 |
| ElPaso | El Paso | Sep 2012 | 3 | 4 | 376 | 343 |
| Metagorda | Bay City | Sep 2012 | 3 | 3 | 37 | 36 |
| Deaf Smith | Hereford | Sep 2012 | 1 | 1 | 18 | 15 |
| Hunt Memorial | Greenville | Sep 2012 | 1 | 3 | 97 | 95 |
| Mitchell | Colorado City | Sep 2012 | 1 | 1 | 15 | 16 |
| Angleton-Danbury | Angleton | Sep 2012 | - | - | 30 | 29 |
| Gaines | Seminole | Sep 2012 | - | 1 | 19 | 15 |
| Titus | Mt Pleasant | Sep 2012 | - | 3 | 62 | 67 |
| Hopkins | Sulphur Springs | Sep 2012 | (5) | 2 | 53 | 54 |
| Gainesville | Gainesville | Sep 2012 | (7) | (1) | 26 | 30 |
| Nacogdoches | Nacogdoches | Jun 2012 | (7) | (5) | 74 | 80 |
| Harris | Houston | Feb 2013 | (41) | 7 | 593 | 559 |
| Total all 21 | 129 | 210 | 4,375 | 4,178 | ||
| % Change From Prior Year | -39% | 5% | ||||
| Total Bottom Line Profits as % of Total Operating Revenues | 2.9% | 5.0% | ||||
And in an earlier post Texas County District Hospitals, I showed how Texans paying the Property Taxes funding these massive Operating Losses of $1.604 bil should get huge Property Tax relief if Medicaid were expanded in Texas.
OK so what about the smaller Texas Non-Profit Hospital Organizations which weren't Texas County District Hospitals? How did they do?
From a review of audited financial statements in the Electronic Municipal Market Access (EMMA), I found 13 Non-Profit Hospital Organizations headquartered in the State of Texas with Total Operating Revenues of more than $10 mil each in the most recent fiscal year but also with Net Assets of less than $400 mil each.
These 13 smaller Texas Non-Profit Hospital Organizations generated Total Bottom Line Earnings of $78 mil in the most recent fiscal year, which was down 36% from the prior year.
These Total Bottom Line Earnings were only 2.2% of the related Total Operating Revenues for these 13 smaller Texas Non-Profit Hospital Organizations as compared with a substantially higher 9.1% for the 15 large ones.
Below here are the Bottom Line Earnings (Losses) and Total Operating Revenues of each of these 13 smaller Texas Non-Profit Hospital Organizations for each of the most recent two fiscal years:
| Most | Bottom | Bottom | ||||
| Recent | Line | Line | Total | Total | ||
| Annual | Net | Net | Operating | Operating | ||
| Fiscal | Income | Income | Revenues | Revenues | ||
| City | Year | Current | Prior | Current | Prior | |
| HQs | End | Year | Year | Year | Year | |
| mils $s | mils $s | mils $s | mils $s | |||
| Smaller Texas Non-County District Hospitals | ||||||
| United Regional Health Care | Wichita Falls | Dec 2012 | 40 | 40 | 279 | 290 |
| Hendrick Medical Center | Abilene | Aug 2012 | 34 | 41 | 323 | 309 |
| East Texas Medical Center | Tyler | Oct 2012 | 12 | 20 | 942 | 888 |
| Decatur Hospital Authority | Decatur | Dec 2012 | 12 | 2 | 144 | 124 |
| Hillcrest Baptist Medical Center | Waco | Aug 2012 | 9 | 4 | 223 | 215 |
| Good Shepherd Health | Longview | Sep 2012 | 4 | 13 | 402 | 375 |
| Mission Hospital | Mission | Sep 2012 | - | 2 | 112 | 114 |
| St. Mark's Medical Center | LaGrange | Jun 2012 | - | 1 | 27 | 26 |
| Memorial Health System East Texas | Lufkin | Dec 2012 | (1) | (16) | 192 | 178 |
| Community Hospital Brazosport | Lake Jackson | Dec 2012 | (4) | (5) | 73 | 73 |
| Guadalupe Regional Medical Center | Seguin | Sep 2012 | (5) | 1 | 80 | 79 |
| Trinity Mother Frances Health | Tyler | Jun 2013 | (7) | 27 | 653 | 644 |
| Sid Peterson Memorial Hospital | Kerrville | Jun 2012 | (16) | (8) | 93 | 90 |
| Total all 13 | 78 | 122 | 3,543 | 3,405 | ||
| % Change From Prior Year | -36% | 4% | ||||
| Total Bottom Line Profits as % of Total Operating Revenues | 2.2% | 3.6% | ||||
So, the country's huge and continually expanding income inequality is not just related to very wealthy individuals and everyone else. It also clearly exists in the Non-Profit Hospital arena.
The solution to this massive income inequality in the Non-Profit Hospital arena really isn't that difficult. It's a two-step process.
The first step of the solution is simply for every State to Expand Medicaid. And there shouldn't be a problem with some States being permitted to do a creative disguised Expansion of Medicaid.
Let me show the relevant amounts related to the financial impact on these smaller Texas Hospitals of Texas Expanding Medicaid.
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, 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 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, especially when compared to the related Hospital Operating Income.
From a review of EMMA, below here are the Provisions for Bad Debts and Costs of their Uncompensated Charity Care disclosed in their most recent audited financial statements of each of these 13 smaller Texas Non-Profit Hospital Organizations:
| Most | One Year | One | One | |||
| Recent | One Year | Estimated | Year | Year | ||
| Annual | Provision | Cost of | Total | Hospital | ||
| Fiscal | For | Uncompensated | Earnings | Operating | ||
| City | Year | Bad | Charity | Charge | Income | |
| HQs | End | Debts | Care | of Both | (Loss) | |
| mils $s | mils $s | mils $s | mils $s | |||
| Smaller Texas Non-County District Hospitals | ||||||
| East Texas Medical Center | Tyler | Oct 2012 | 155 | 37 | 192 | 12 |
| Good Shepherd Health | Longview | Sep 2012 | 134 | 19 | 153 | 6 |
| Memorial Health System East Texas | Lufkin | Dec 2012 | 96 | 9 | 105 | (3) |
| Trinity Mother Frances Health | Tyler | Jun 2013 | 51 | 20 | 71 | 2 |
| Hendrick Medical Center | Abilene | Aug 2012 | 43 | 14 | 57 | 21 |
| United Regional Health Care | Wichita Falls | Dec 2012 | 26 | 20 | 46 | 26 |
| Hillcrest Baptist Medical Center | Waco | Aug 2012 | 31 | 14 | 45 | 7 |
| Guadalupe Regional Medical Center | Seguin | Sep 2012 | 9 | 22 | 31 | (1) |
| Community Hospital Brazosport | Lake Jackson | Dec 2012 | 26 | 2 | 28 | (4) |
| Decatur Hospital Authority | Decatur | Dec 2012 | 20 | 7 | 27 | 16 |
| Mission Hospital | Mission | Sep 2012 | 19 | 8 | 27 | (2) |
| Sid Peterson Memorial Hospital | Kerrville | Jun 2012 | 7 | 7 | 14 | (5) |
| St. Mark's Medical Center | LaGrange | Jun 2012 | 3 | - | 3 | - |
| Total all 13 | 620 | 179 | 799 | 75 | ||
| Provision for Bad Debts | 620 | |||||
| Estimated Costs of Uncompensated Charity Care | 179 | |||||
| Operating Income Excluding Bad Debts and Uncompensated Charity Care Costs | 874 | |||||
So, these 13 smaller Texas Non-Profit Hospital Organizations generated Audited Total Hospital Operating Income of $75 mil in the most recent fiscal year. Driving down this $75 mil Total Hospital Operating Income were Total Provisions for Bad Debts of $620 mil and Total Costs of Uncompensated Charity Care of another $179 mil. Thus, exclusive of these two earnings charges, Total Hospital Operating Income would have been $874 mil, which is $799 mil higher than the reported $75 mil.
Now let me focus on a Bottom Line Profit Margin % basis. For all 13 smaller Texas Non-Profit Hospital Organizations combined, the Total Bottom Line Profits were $78 mil in the most recent fiscal year and Total Operating Revenues were $3.543 bil in the most recent year resulting in a 2.2% Profit Margin.
Excluding the above $620 mil of Provisions for Bad Debts and the above $179 mil of Uncompensated Charity Care Costs, the Total Bottom Line Profits exclusive of these two charges would be $877 mil, which would yield a Profit Margin of 24.8% in the most recent year for these 13 smaller Texas Non-Profit Hospital Organizations.....yeah, that's more than 11 times the reported 2.2% Profit Margin %.
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 Texas were to wisely elect to Expand Medicaid, which is the predominant driver of these two earnings charges being very substantially reduced.
Which takes me to the second step of this solution.
There are so many extremely profitable Non-Profit Hospital Organizations all over the country, like the 16 large ones in Texas which generated a Total Bottom Line Profit Margin of 9.1% of Total Operating Revenues in the most recent fiscal year.
These excessive profits have been going on, and compounding, for many years, particularly during the entire period of the Obama Administration, where interest rates have been extremely low and the stock market appreciation extremely high.
Further, these highly profitable large Non-Profit Hospital Organizations will also have their already sky-high annual earnings get an additional huge dose of profits from the ACA and especially from the Expansion of Medicaid.
Thus it only makes sense that the clearly excessive past and future profits of these large Non-Profit Hospital Organizations be used in wisely-designed, creative ways to grow the US economy and bring down US unemployment and US underemployment. For instance, a wisely designed, creative removal of these excess profits could be used to finance a substantial portion of the 3 or 4 years elimination of the US sequester budget cuts. And this removal of excess profits could also be used to finance US infrastructure investments.
The end result of this two-step solution process will be to increase US real GDP growth, to decrease US unemployment and US underemployment, to substantially enhance the financial strength of severely struggling smaller hospitals, to reduce the debt load of both US and State Governments, and to simultaneously substantially bend back the long-term US Total Health Care Cost Curve.
