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.
Connecticut is one State whose large Non-Profit Hospital Organizations 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 7 Connecticut Non-Profit Hospital Organizations with Net Assets above $400 mil. These Connecticut Hospital Organizations generated Total Operating Income of $253 mil in the most recent year, which was a modest 4.2% of Total Operating Revenues of $5.994 bil.
With Connecticut Hospitals generating such modest profits, a key beneficiary will be Connecticut citizens buying health insurance on the insurance exchange. Connecticut 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 Connecticut health insurance exchange is that Connecticut has wisely elected to expand Medicaid. This will increase Connecticut Hospital profits substantially and thus permit Connecticut 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 Connecticut State Insurance Exchange.
So just how much will Connecticut Hospital Profits increase due to the ACA and the Expansion of Medicaid?
Well, these 7 Connecticut Hospital Organization's audited financial statements show it will be large.
For these 7 Connecticut Hospital Organizations, Total Operating Income was $253 mil in the most recent year. Driving down these Operating Profits were Provisions for Bad Debts of $202 mil and Uncompensated Charity Care Costs Incurred of another $103 mil. Thus Total Operating Income exclusive of these two Earnings Charges was $558 mil, which was more than double the reported Total Operating Income of $253 mil.
Granted not all of these two huge Earnings Charges will be eliminated with ACA and Medicaid Expansion, but a substantial 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 7 large Connecticut Hospital Organizations:
| Operating | ||||
| Total | Income | |||
| City | Operating | Operating | Profit | |
| HQs | Income | Revenues | Margin | |
| mils $s | mils $s | % | ||
| Connecticut Non-Profit Hospital Organizations | ||||
| Lawrence & Memorial Corp | New London | 1 | 358 | 0.3% |
| Western Connecticut Health | Danbury | 18 | 742 | 2.4% |
| Hartford Healthcare | Hartford | 61 | 2,070 | 2.9% |
| Greenwich Hospital | Greenwich | 12 | 310 | 3.9% |
| Stamford Health | Stamford | 27 | 503 | 5.4% |
| Yale-New Haven Hospital | New Haven | 107 | 1,728 | 6.2% |
| William Backus Hospital | Norwich | 27 | 283 | 9.5% |
| Total all 7 | 253 | 5,994 | 4.2% | |
