From a review of the Electronic Municipal Market Access (EMMA), I found 9 Non-Profit Hospital Organizations headquartered in the State of Wisconsin 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 9 Wisconsin 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 | ||||
| Wisconsin Non-Profit Hospital Organizations | ||||||
| Aurora Health Care | Milwaukee | Dec 2012 | 198 | 96 | 102 | 106% |
| Froedtert | Milwaukee | Jun 2013 | 179 | 74 | 105 | 142% |
| Univ Wisconsin Hosps&Clinics | Madison | Jun 2012 | 101 | 91 | 10 | 11% |
| Ministry Health Care | Milwaukee | Jun 2013 | 101 | 62 | 39 | 63% |
| ProHealth Care | Waukesha | Sep 2013 | 97 | 84 | 13 | 15% |
| Gundersen Lutheran Health | La Crosse | Dec 2012 | 83 | 37 | 46 | 124% |
| Medical College Wisconsin | Milwaukee | Jun 2013 | 81 | 23 | 58 | 252% |
| Wheaton Franciscan Health | Glendale | Jun 2013 | 69 | 37 | 32 | 86% |
| Children's Hospital & Health | Milwaukee | Dec 2012 | 58 | 39 | 19 | 49% |
| Total all 9 | 967 | 543 | 424 | 78% | ||
Yeah, these 9 Wisconsin Non-Profit Hospital Organizations generated Total Bottom Line Profits of $967 mil in the most recent fiscal year, which was a $424 mil increase, or an exceptional 78% increase, over the previous fiscal year.
Also, 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 these 9 Wisconsin 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 | ||||
| Wisconsin Hospital Organizations | |||||
| Aurora Health Care | Milwaukee | Dec 2012 | 198 | 4,125 | 4.8% |
| Froedtert | Milwaukee | Jun 2013 | 179 | 1,499 | 11.9% |
| Univ Wisconsin Hosps&Clinics | Madison | Jun 2012 | 101 | 1,201 | 8.4% |
| Ministry Health Care | Milwaukee | Jun 2013 | 101 | 1,597 | 6.3% |
| ProHealth Care | Waukesha | Sep 2013 | 97 | 688 | 14.1% |
| Gundersen Lutheran Health | La Crosse | Dec 2012 | 83 | 882 | 9.4% |
| Medical College Wisconsin | Milwaukee | Jun 2013 | 81 | 926 | 8.7% |
| Wheaton Franciscan Health | Glendale | Jun 2013 | 69 | 1,763 | 3.9% |
| Children's Hospital & Health | Milwaukee | Dec 2012 | 58 | 724 | 8.0% |
| Total all 9 | 967 | 13,405 | 7.2% |
As you can see in the above chart, the Total Bottom Line Profits for these 9 Wisconsin Non-Profit Hospital Organizations was $967 mil in the most recent audited fiscal year reported, which was a very robust 7.2% of Total Operating Revenues in the same period. As a comparison, the Combined Bottom Line Profit Margin of the prestigious 30 Dow Industrial companies was 9.6% of their Total Revenues in the most recent year.
When you compare the 7.2% Total Bottom Line Profit Margin of these 9 Wisconsin 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 Wisconsin Non-Profit Hospital Organizations in the most recent year were on fire, and especially since these Total Bottom Line Earnings were up a huge 78% in the current year over the previous year.
These strong bottom line profits of these 9 Wisconsin 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 much more to this positive earnings story.
When the Insurance Exchanges kick in starting in 2014, these Wisconsin 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 very robustly due to many of the Uninsured getting insurance and also due to the many of the Underinsured getting much better insurance.
Bottom Line Income is a combination of Hospital Operating Income and Non-Operating Income, with the latter being predominantly Investment Returns on Stocks and Bonds.
There are specifically two items which will drive higher Hospital Organization profits due to the ACA and also especially due to US States electing the Expansion of Medicaid.
First, there is the Hospital Operating Statement Provision for Bad Debts' earnings charge which will be dramatically reduced due to the substantially better insurance situation of hospital patients due to the ACA. 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 due to the much improved 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.
So what about the amounts of these two items? Well, they are very large 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 the 8 Wisconsin Non-Profit Hospital Organizations which had Net Assets above $400 mil currently. I excluded below the Milwaukee-based Children's Hospital & Health:
| 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 | |||
| Wisconsin Hospital Organizations | ||||||
| Aurora Health Care | Dec 2012 | 238 | 45 | 283 | 138 | |
| Wheaton Franciscan Health | Jun 2013 | 75 | 44 | 119 | 39 | |
| Froedtert Health | Jun 2012 | 72 | 19 | 91 | 83 | |
| Univ Wisconsin Hosps&Clinics | Jun 2012 | 20 | 53 | 73 | 127 | |
| Ministry Health Care | Sep 2012 | 49 | 18 | 67 | 89 | |
| Gundersen Lutheran Health | Dec 2012 | 33 | 5 | 38 | 43 | |
| Medical College Wisconsin | Jun 2013 | 27 | 6 | 33 | 31 | |
| ProHealth Care | Sep 2012 | 24 | 5 | 29 | 33 | |
| Total all 8 | 538 | 195 | 733 | 583 | ||
| Provision for Bad Debts | 538 | |||||
| Estimated Costs of Uncompensated Charity Care | 195 | |||||
| Operating Income Excluding Bad Debts and Uncompensated Charity Care Costs | 1,316 | |||||
So, these 8 Wisconsin Hospital Organizations had Audited Total Hospital Operating Income of $583 mil in the most recent fiscal year audited. Driving down this $583 mil Total Hospital Operating Income were Total Provisions for Bad Debts of $538 mil and Total Costs of Uncompensated Charity Care of another $195 mil. Thus, exclusive of these two earnings charges, Total Hospital Operating Income would have been $1.316 bil, which is $733 mil higher than the reported $583 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 Wisconsin 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 Wisconsin.
And the above two earnings charges are just for one year.
With these strong, ongoing Wisconsin 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. And if Wisconsin 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 more significant reduction in hospital patient charges, a more significant bending back of the US Long-term Total Health Care Cost Curve and a more significant 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 ideally over the next 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.
