| Most | |||||
| Recent | |||||
| Annual | Bottom | ||||
| Fiscal | Line | Total | Profit | ||
| City | Year | Net | Operating | Margin | |
| HQs | End | Income | Revenues | % | |
| mils $s | mils $s | ||||
| South Carolina Hospital Organizations | |||||
| McLeod Health | Florence | Sep 2012 | 120 | 708 | 16.9% |
| Palmetto Health | Columbia | Sep 2012 | 86 | 1,074 | 8.0% |
| Greenville Hospital System | Greenville | Sep 2012 | 56 | 1,443 | 3.9% |
| Self Regional Healthcare | Greenwood | Sep 2012 | 43 | 356 | 12.1% |
| Lexington County Health Services | West Columbia | Sep 2012 | 42 | 671 | 6.3% |
| Spartanburg Regional Healthcare | Spartanburg | Sep 2012 | 21 | 747 | 2.8% |
| Total all 6 | 368 | 4,999 | 7.4% | ||
As you can see in the above chart, the Total Bottom Line Profits for these 6 South Carolina Non-Profit Hospital Organizations was $368 mil in the most recent audited fiscal year reported, which was a very fine 7.4% of Total Operating Revenues. As a comparison, the Combined Bottom Line Profit Margin of the prestigious 30 Dow Industrial companies was not a substantially higher 9.6% of their Total Revenues in the most recent year.
These fine bottom line profits of these 6 South Carolina 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.
The State of South Carolina is burdened with a very high uninsured and also a very high underinsured population. But on the plus side, Obamacare should substantially improve South Carolina's very high uninsured and very high underinsured problems. When the Insurance Exchanges kick in starting in 2014, these South Carolina Non-Profit Hospital Organizations should see their profits increase very nicely.
There are specifically two items which will drive higher Hospital Organization profits due to the Affordable Care Act (ACA).
First, there is the Operating Statement Provision for Bad Debts' earnings charge which will be markedly reduced due to the 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 markedly reduced due to the much better 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.
But to supercharge the Hospital Profit improvement, the key is to maximize the number of South Carolina residents who will switch from being uninsured to insured and who will switch from being underinsured to much better insured. And the best supercharged fuel here to make this happen is for the State of South Carolina to elect to Expand Medicaid. US States like South Carolina with a very high percentage of uninsured and underinsured are the ones whose future Hospital Earnings have the best shot of exploding upwardly if Medicaid is Expanded.
So what about the amounts of these two earnings charge items.....the Provision for Bad Debts and the Uncompensated Charity Care Costs? Well, they are very large when compared to the related Hospital Operating Income and particularly so in US States with a high percentage of uninsured and underinsured like South Carolina.
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 above 6 South Carolina Non-Profit Hospital Organizations which had Net Assets above $400 mil currently.
In addition, I added below an allocation of 17.1% of Carolinas Health Care consolidated amounts based on the 17.1% of Carolinas Health Care total licensed beds located in South Carolina, 1.9% of For-Profit HCA's consolidated amounts based on the 1.9% of HCA's total licensed beds located in South Carolina, 5.6% of For-Profit Community Health Systems consolidated amounts based on the 5.6% of Community Health Systems total licensed beds located in South Carolina, and 4.3% of For-Profit Tenet Health Care's consolidated amounts based on the 4.3% of Tenet Health Care's total licensed beds located in South Carolina:
| 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 | |||
| South Carolina Hospital Organizations | ||||||
| Palmetto Health | Sep 2012 | 206 | 46 | 252 | 13 | |
| Greenville Hospital System | Sep 2012 | 160 | 75 | 235 | 37 | |
| McLeod Health | Sep 2012 | 149 | 36 | 185 | 45 | |
| Lexington County Health Svcs | Sep 2012 | 132 | 26 | 158 | 43 | |
| South Carolina 1.9% of HCA | Dec 2012 | 72 | 45 | 117 | 55 | |
| South Carolina 5.6% of Community Health | Dec 2012 | 110 | 7 | 117 | 35 | |
| Spartanburg Regional Healthcare | Sep 2012 | 68 | 28 | 96 | 20 | |
| South Carolina 17.1% of Carolinas Health | Dec 2012 | 61 | 26 | 87 | 29 | |
| South Carolina 4.3% of Tenet Health | Dec 2012 | 34 | 19 | 53 | 14 | |
| Self Regional Healthcare | Sep 2012 | 45 | 6 | 51 | 35 | |
| Total all 10 | 1,037 | 314 | 1,351 | 326 | ||
| Provision for Bad Debts | 1,037 | |||||
| Estimated Costs of Uncompensated Charity Care | 314 | |||||
| Operating Income Excluding Bad Debts and Uncompensated Charity Care Costs | 1,677 | |||||
So, these 10 South Carolina Hospital Organizations had Audited Total Hospital Operating Income of $326 mil in the most recent fiscal year audited. Driving down this $326 mil Total Hospital Operating Income were Total Provisions for Bad Debts of $1.037 bil and Total Costs of Uncompensated Charity Care of another $314 mil. Thus, exclusive of these two earnings charges, Total Hospital Operating Income would have been $1.677 bil, which is a massive $1.351 bil higher than the reported $326 mil.
Granted these two earnings charges will not be totally eliminated with the ACA, but a very significant amount of these two earnings charges will be eliminated. The percentage of these two charges eliminated will not be nearly as high in South Carolina since it has chosen not to expand Medicaid as it will be in the States electing to expand Medicaid. But it will still be a very significant percentage reduction in these two earnings charges in South Carolina Hospital Organizations.
And the above two earnings charges are just for one year.
With the exceptionally strong, ongoing South Carolina 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. And if South Carolina eventually sees the light and elects to Expand Medicaid, after all there is virtually no cost to the State for Expanding Medicaid, the ultimate result should be a substantial reduction in hospital patient charges, a very significant bending back of the US Long-term Total Health Care Cost Curve and a substantial 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.
