One reason US Hospital bills are so high is that many of the larger Non-Profit Hospitals Systems set their pricing for hospital procedures so that they make a lot of money and retain it tax free, further increasing their already massive treasure chest of Investments in Equity and Debt Securities, which also grow tax free.
Thus, US Hospitals are playing a key role in ultimately determining whether health insurance premiums are fairly priced on the health insurance exchanges.
Arizona is one State whose Non-Profit Hospital Organizations are generally not being greedy in generating high operating profits.
From a review of audited financial statements in the Electronic Municipal Market Access (EMMA), I found 3 Arizona Non-Profit Hospital Organizations with Net Assets above $250 mil. In addition, I found 6 additional Hospitals with Net Assets above $250 mil by reviewing the just excellent Arizona Dept of Health website. These 9 Arizona Non-Profit Hospital Organizations generated Total Operating Income of $361 mil in the most recent year, which was a modest 3.7% of Total Operating Revenues of $9.766 bil.
With Arizona Hospitals generating such modest profits, a key beneficiary will be Arizona citizens buying health insurance on the insurance exchange. Arizona Hospitals, for the most part, will not be baking in excessive Hospital profits demands in their negotiations with health insurance companies on pricing for hospital procedures which ultimately determines what insurance premiums are set by health insurance companies for Arizona citizens on the Federal Insurance Exchange.
Another factor which will help keep insurance premium prices reasonable for Arizona citizens in the Federal health insurance exchange is that Arizona has wisely elected to expand Medicaid. This will increase Arizona Hospital profits substantially and thus permit Arizona Hospitals to be even more reasonable in their negotiations with health insurance companies on pricing for hospital procedures which ultimately drives what health insurance premiums are set at for Arizona residents by health insurers on the Federal Health Insurance Exchange.
So just how much will Arizona Hospital Profits increase due to the ACA and the Expansion of Medicaid?
Well, for these 9 Arizona Hospital Organizations, Total Operating Income was $361 mil in the most recent year. Driving down these Operating Profits were Provisions for Bad Debts of $997 mil and Uncompensated Charity Care Costs Incurred of another $334 mil. Thus Total Operating Income exclusive of both Provision for Bad Debts and Charity Costs Incurred was $1.692 bil, which was nearly 5 times the reported Total Operating Income of $361 mil.
Granted not all of these two huge Earnings Charges will be eliminated with ACA and Medicaid Expansion, but a very significant portion of them will.
Below here are Audited Operating Income, Total Operating Revenues and Operating Income Profit Margin Percentage in the most recent year for each of these 9 large Arizona Non-Profit Hospital Organizations:
| Operating | ||||
| Operating | Total | Income | ||
| City | Income | Operating | (Loss) | |
| HQs | (Loss) | Revenues | Margin | |
| mils $s | mils $s | % | ||
| Arizona Non-Profit Hospital Organizations | ||||
| Maricopa Medical Center | Phoenix | (45) | 402 | -11.2% |
| St, Joseph's Hosp Med Ctr | Phoenix | (31) | 854 | -3.6% |
| Yuma Regional Med Ctr | Yuma | (5) | 301 | -1.7% |
| University Arizona Med Ctr | Tucson | 13 | 650 | 2.0% |
| Scottsdale Healthcare | Scottsdale | 28 | 851 | 3.3% |
| Northern Arizona Healthcare | Flagstaff | 30 | 535 | 5.6% |
| Mayo Climic Arizona | Phoenix | 56 | 979 | 5.7% |
| Banner Health | Phoenix | 290 | 4,878 | 5.9% |
| Chandler Reg Med Ctr | Chandler | 25 | 316 | 7.9% |
| Total all 9 | 361 | 9,766 | 3.7% |
