West Virginia Non-Profit Hospital Earnings On Fire Under Obamacare and Headed Higher

From a review of the Electronic Municipal Market Access (EMMA), I found 2 Non-Profit Hospital Organizations headquartered in the State of West Virginia 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 both of these West Virginia Non-Profit Hospital Organizations:

			Most
		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
West Virginia Non-Profit Hospital Organizations
West Virginia United Health System	Fairmont	Dec 2012	95	(4)	99	2475%
CAMC Health System	Charleston	Dec 2012	87	19	68	358%
Total of both			182	15	167	1113%

Note: West Virginia United Health System's Bottom Line Profits in 2011 excludes an Inherent Contribution.

Yeah, these 2 West Virginia Non-Profit Hospital Organizations generated Total Bottom Line Profits of $182 mil in the most recent fiscal year, which was a $167 mil increase, or an off-the-charts 1113% increase, over the previous fiscal year.

So how have these Hospitals done in 2013 on the earnings front?  From EMMA, these 2 West Virginia Non-Profit Hospital Organizations generated Total Bottom Line Profits of $113 mil in the year-to-date 2013 interim periods disclosed in EMMA, which was another 19% increase from the prior year comparable periods, as you can see in the following chart:

			2013	2012
			Bottom	Bottom
			Line	Line
		Interim	Net	Net	Increase	Increase
		Period	Income	Income	(Decrease)	(Decrease)
			mils $s	mils $s	Amount	%
West Virginia Hospital Organizations
West Virginia United Health System		6 Mos Jun 2013	64	42	22	52%
CAMC Health System		9 Mos Sep 2013	49	53	(4)	-8%
Total of both			113	95	18	19%

And 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 both of these West Virginia 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
West Virginia Non-Profit Hospital Organizations
West Virginia United Health System	Fairmont	Dec 2012	95	1,387	6.8%
CAMC Health System	Charleston	Dec 2012	87	936	9.3%
Total of both			182	2,323	7.8%

As you can see in the above chart, the Total Bottom Line Profits for these 2 West Virginia Non-Profit Hospital Organizations was $182 mil in the most recent audited fiscal year reported, which was a very robust 7.8% of Total Operating Revenues.  As a comparison, the Combined Bottom Line Profit Margin of the prestigious 30 Dow Industrial companies was just a bit higher 9.6% of their Total Revenues in the most recent year.
 
When you review all of the above, the clear conclusion is that the recent earnings of these West Virginia Non-Profit Hospital Organizations were on fire.

But there's much more to this earnings story.

When the Insurance Exchanges kick in starting in 2014, these West Virginia 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 West Virginia is wisely Expanding Medicaid, the profits of all West Virginia 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.

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 these 2 West Virginia Non-Profit Hospital Organizations which had Net Assets above $400 mil currently:

				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
West Virginia Hospital Organizations
West Virginia United Health System		Dec 2012	120	44	164	37
CAMC Health System		Dec 2012	79	74	153	54
Total of both			199	118	317	91
Provision for Bad Debts						199
Uncompensated Charity Care Costs						118
Operating Income Excluding Bad Debts and Uncompensated Charity Care Costs						408

So, these 2 Hospital Organizations had Audited Total Hospital Operating Income of $91 mil in the most recent fiscal year.  Driving down this $91 mil Total Hospital Operating Income were Total Provisions for Bad Debts of $199 mil and Total Costs of Uncompensated Charity Care of another $118 mil.  Thus, exclusive of these two earnings charges, Total Hospital Operating Income would have been $408 mil, which is $317 mil higher than the reported $91 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 West Virginia 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 West Virginia 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.