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.
Colorado is one State whose Non-Profit Hospital Organizations, with one clear exception (Vail Health Services), are not being greedy in generating high operating profits.
From a review of audited financial statements in the Electronic Municipal Market Access (EMMA), I found 9 Colorado Non-Profit Hospital Organizations with both Net Assets above $200 mil and Total Operating Revenues above $200 mil in the most recent year. When I exclude Children's Hospital in Aurora, that leaves 8. These 8 Colorado Non-Profit Hospital Organizations generated Total Operating Income of $366 mil in the most recent year, which was a very modest 2.1% of Total Operating Revenues of $17.208 bil.
With Colorado Hospitals generating such modest profits, a key beneficiary will be Colorado citizens buying health insurance on the insurance exchange. Colorado 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 on the insurance exchange.
Another factor which will help keep insurance premium prices reasonable in the Colorado health insurance exchange is that Colorado has wisely elected to expand Medicaid. This will increase Colorado Hospital profits very significantly and thus permit Colorado 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 by health insurers on the Colorado State Insurance Exchange.
So just how much will Colorado Hospital Profits increase due to the ACA and the Expansion of Medicaid?
Well, these 8 Colorado Hospital Organization's audited financial statements show it will be substantial.
For these 8 Colorado Hospital Organizations, Total Operating Income was $366 mil in the most recent year. Driving down these Operating Profits were Provisions for Bad Debts of $1.241 bil and Uncompensated Charity Care Costs Incurred of another $934 mil. Thus Total Operating Income exclusive of these two Earnings Charges was $2.541 bil, which was nearly 7 times the reported Total Operating Income of $366 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 8 Colorado Non-Profit Hospital Organizations:
| Operating | ||||
| Operating | Total | Income | ||
| City | Income | Operating | (Loss) | |
| HQs | (Loss) | Revenues | Margin | |
| mils $s | mils $s | % | ||
| Colorado Non-Profit Hospital Organizations | ||||
| Catholic Health Initiatives | Inverness | (55) | 10,708 | -0.5% |
| Denver Health & Hospital | Denver | 5 | 744 | 0.7% |
| Sisters Charity Leavenworth | Denver | 57 | 2,223 | 2.6% |
| Boulder Community Hospital | Boulder | 12 | 293 | 4.1% |
| Parkview Medical Center | Pueblo | 13 | 298 | 4.4% |
| North Colorado Medical Center | Greeley | 18 | 407 | 4.4% |
| University Colorado Health | Ft. Collins | 270 | 2,321 | 11.6% |
| Vail Health Services | Vail | 46 | 214 | 21.5% |
| Total all 8 | 366 | 17,208 | 2.1% | |
