Sunday, November 17, 2013

Washington State Non-Profit Hospital Earnings Up 115% in the Most Recent Year Under Obamacare and Headed Substantially Higher

From a review of the Electronic Municipal Market Access (EMMA), I found 4 Non-Profit Hospital Organizations headquartered in the State of Washington with Net Assets at the most recent date reported of more than $400 mil each.  Below here are the Bottom Line Profits in the most recent two audited fiscal years reported for each of these 4 Washington Non-Profit Hospital Organizations:


Most Recent Prior

Recent Year Year

Annual Bottom Bottom

Fiscal Line Line Increase Increase

City Year Net Net (Decrease) (Decrease)

HQs End Income Income Amount %

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

Providence Health Renton Dec 2012          412               362            50 14%
MultiCare Health Tacoma Dec 2012          241                 59          182 308%
Seattle Children's Healthcare Seattle Sep 2012          202                 64          138 216%
PeaceHealth Vancouver Jun 2013            96                (43)          139 323%

Total all 4

         951               442          509 115%

Note:  Providence Health's above Bottom Line Profits of $412 mil in the most recent year excludes $805 mil of Economic Gains from new Hospital Affiliations.

As you can see in the above chart, these 4 Washington State Non-Profit Hospital Organizations generated Total Bottom Line Profits of $951 mil in the most recent fiscal year, up an exceptional 115% from the previous year.

But there's much more to this earnings story.

When the Insurance Exchanges kick in starting in 2014, these Washington State Non-Profit Hospital Organizations should see their profits increase by substantially 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.  And since Washington is wisely Expanding Medicaid, the profits of all Washington Hospitals will be substantially increased by reducing the huge earnings charges related to both Bad Debts and Charity Care.

So what about the amounts of these two items.....Bad Debts and Uncompensated Charity Care?  Well, they are very large, especially when compared to the related Hospital Operating Income, particularly in Washington which has a substantial overweighting of Catholic Hospitals.

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 3 Washington Non-Profit Hospital Organizations which had Net Assets above $400 mil currently.  I excluded Seattle Children's Healthcare.  And I included a 15% Washington allocation of Catholic Health Initiatives amounts, since Washington-based Franciscan Health System comprised 15% of Catholic Health Initiative's Consolidated Total Operating Revenues:

One Year One

One Year Estimated Year One

Most Provision Cost of Total Year

Recent For Uncompensated Earnings Hospital

City Annual Bad Charity Charge Operating

HQs FYE Debts Care of Both Income

mils $s mils $s mils $s mils $s
Washington Hospital Organizations

Providence Health Renton Dec 2012          390               272          662          204
PeaceHealth Vancouver Jun 2013          161                 68          229            10
Wash 15% of Catholic Health Initiatives Jun 2013          123                 48          171             (8)
MultiCare Health Tacoma Dec 2012          132                 35          167          159


Total all 4

         806               423       1,229          365

Provision for Bad Debts

Estimated Costs of Uncompensated Charity Care


Operating Income Excluding Bad Debts and Uncompensated Charity Care Costs


So, these 4 Hospital Organizations had Audited Total Hospital Operating Income of $365 mil in the most recent fiscal year.  Driving down this $365 mil Total Hospital Operating Income were Total Provisions for Bad Debts of $806 mil and Total Costs of Uncompensated Charity Care of another $423 mil.  Thus, exclusive of these two earnings charges, Total Hospital Operating Income would have been $1.594 bil, which is $1.229 bil higher than the reported $365 mil.
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 since Washington is electing to Expand Medicaid, which is the predominant driver of these two earnings charges being very substantially reduced.

And the above two earnings charges are just for one year.

With these very strong, ongoing Washington Non-Profit 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. 

And lastly, it is just incredible how much the financial strength of these Washington State Non-Profit Hospitals has been enhanced during the Obama Administration.

From EMMA, below here are the Net Assets of these 4 Washington State Non-Profit Hospital Organizations at June 30, 2013 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

Providence Health Renton WA  Jun 13      6,757
Dec 08     3,911 73%
Seattle Children's Healthcare Seattle WA Jun 13     1,759
Sep 09     1,195 47%
PeaceHealth Vancouver WA Jun 13     1,617
Jun 09        897 80%
MultiCare Health System Tacoma WA  Jun 13      1,475
Dec 08        650 127%

Total all 4


    6,653 74%

Yeah, these 4 Washington State Non-Profit Hospital Organizations had their Total Net Assets increase by a massive $4.955 bil to $11.608 bil, an increase of a very robust 74% during the Obama Administration so far.  This $4.955 bil Net Asset increase comes predominantly from the tax-free cumulative earnings of these Washington State Hospitals during the Obama Administration.