So who's in third place? Well, Indiana's Non-profit Hospitals, which posted a Total Operating Income Margin of 6.4% in 2012.
Having such a high Operating Profit Margin is nothing to write home about. It tells you why US Health Care Costs are so much higher than in all other major countries in the rest of the world. It also tells you why Hospital Patient Charges are so incredibly high in the US. And it also tells you why Health Insurance Premiums in the US have been so high in the past.
Clearly, it is much better for US Non-Profit Hospitals to reduce Patient Charges for Services and thereby generating modest profits than for them to continue to increase Hospital Patient Services significantly and thereby generating excessive profits.
But there's a silver lining to this dark cloud of excessively high overall Indiana Operating Profit Margins in 2012. In 2013, these excessive overall Operating Profits of Indiana Non-Profit Hospitals have pretty much been removed, resulting in so many Indiana Hospitals now having the financial flexibility to facilitate reasonable health insurance premium prices for Indiana residents on the Federal Health Insurance Exchange. Let me explain further.
From a review of audited financial statements in the Electronic Municipal Market Access (EMMA) and also from a review of audited Hospital financial statements at the Indiana Dept of Health website, I found 43 Indiana Non-Profit Hospital Organizations.
These 43 Indiana Non-Profit Hospital Organizations generated Total Operating Income of $1.349 bil in 2012, which was 6.4% of their Total Operating Revenues of $20.942 bil.
Of these 43 Hospitals, 9 of them had Net Assets above $400 mil. Their Total Operating Income was $1.262 bil in 2012, which was an incredibly high 7.9% of their Total Operating Revenues.
And because of their massive treasure chest of investments in stocks and bonds, coupled with the low interest rate environment and the very robust stock market, these 9 Hospitals generated $445 mil in Investment Income in 2012, which was the predominant reason that their Total Bottom Line Earnings were an even higher $1.678 bil in 2012, which was 10.5% of their Total Operating Revenues. To show just how crazy this 10.5% Bottom Line Profit Margin is, the 30 Dow Industrial companies generated a Total Bottom Line Profit Margin of a much lower 9.6% in the most recent year.
These 9 largest Indiana Hospital Organization dominate the State, comprising 77% of Total Operating Revenues and an even higher 94% of Total Operating Income of all 43 Indiana Non-Profit Hospital Organizations combined.
So what happened since 2012? Well, 4 of them comprising 70% of Total Operating Income of all 43 Indiana Hospitals combined had substantial Operating Profit Margin declines in 2013.....The huge dominant IU Health having its Profit Margin drop from 9.8% in annual 2012 to 6.4% in the 9 Months ended Sept 30, 2013, Beacon Health from 13.5% to 5.0% in the same periods, and the second largest St. Vincent Health having its Profit Margin of 9.6% for the fiscal year ended June 30, 2012 drop to 5.6% for the fiscal year ended June 30, 2013. St. Mary's Health's Profit Margin was 12.8% for the fiscal year ended June 30, 2012. For the fiscal year ended June 30, 2013, St. Mary's Health was consolidated with and included in St. Vincent Health's substantially lower Profit Margin of 5.6%.
Included in the 34 Indiana Hospitals with Net Assets below $400 mil was Marion County Public Hospital Wishard Health Services, which posted an Operating Loss of $139 mil in 2012. For the most recent 5 years combined, Wishard generated Total Operating Losses of $1.063 bil. These massive losses are effectively being funded by Indiana taxpayers. If Indiana changed its mind and decided to fully expand Medicaid, these Wishard losses would go away, for the most part. And thus in all fairness, so should a good chunk of the taxes now being paid to fund these massive losses.
The 33 Indiana Non-Profit Hospital Organizations with Net Assets below $400 mil other than Wishard Health Services generated a Total Operating Income of $226 mil in 2012, which was 5.0% of their Total Operating Revenues. The only State whose smaller Hospitals are higher than Indiana's overall 5.0% Operating Margin is Wisconsin.
Of these 34 smaller Indiana Hospital Organizations, 23 of them have Operating Income Margins below 5.0% in 2012 and another 5 of them had Operating Income Margins between 5.0% and 7.0%. This also bodes well for reasonable health insurance prices for Indiana residents on the Federal Health Insurance Exchange.
So far, Indiana has decided to not fully expand Medicaid. If Indiana changed its mind and decided to fully Expand Medicaid, then the consequences of this action would be to significantly drive down insurance premium prices for Indiana residents in the Federal health insurance exchange. This Indiana Medicaid Expansion would increase Indiana Hospital profits substantially and thus permit Indiana 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 for Indiana residents on the Federal Health Insurance Exchange.
So just how much would Indiana Hospital Profits increase due to the ACA and the Expansion of Medicaid?
All 43 Indiana Non-Profit Hospitals generated Total Operating Income of $1.349 bil in 2012. From earlier studies of 27 of these 43 Hospitals, these Total Operating Earnings included an Earnings Charge of $1.199 bil due to Provisions for Bad Debts and another $685 mil related to Uncompensated Charity Care Costs Incurred. Thus their Total Operating Income Before these these two Earnings Charges was $3.233 bil, which was 2.4 times the reported Total Operating Income of $1.349 bil.
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 or Loss, Total Operating Revenues and Operating Income Profit (Loss) Margin Percentage in 2012 for each of these 43 Indiana Non-Profit Hospital Organizations, broken down between the 9 with Net Assets above $400 mil and the 34 with Net Assets under $400 mil:
| Operating | ||||
| Operating | Total | Income | ||
| City | Income | Operating | (Loss) | |
| HQs | (Loss) | Revenues | Margin | |
| mils $s | mils $s | % | ||
| Indiana Non-Profit Hospital Organizations | ||||
| Largest: Net Assets> $400 mil | ||||
| Community Health Network | Indianapolis | 47.7 | 1,666.8 | 2.9% |
| Franciscan Alliance | Mishawaka | 79.8 | 2,626.9 | 3.0% |
| Community Foundation NW Ind | Munster | 37.3 | 861.9 | 4.3% |
| Deaconess Health | Evansville | 40.5 | 676.6 | 6.0% |
| St Vincent Health | Indianapolis | 210.0 | 2,188.0 | 9.6% |
| Indiana University Health | Indianapolis | 548.7 | 5,578.3 | 9.8% |
| Parkview Health | Fort Wayne | 115.6 | 1,072.6 | 10.8% |
| St Mary's Health | Evansville | 62.3 | 488.5 | 12.8% |
| Beacon Health | South Bend | 120.0 | 886.1 | 13.5% |
| Total 9 Largest | 1,261.9 | 16,045.7 | 7.9% | |
| Smaller: Net Assets< $400 mil | ||||
| Wishard Health Services | Indianapolis | (139.0) | 381.0 | -36.5% |
| Scott Memorial Hospital | Scottsburg | (2.4) | 20.5 | -11.7% |
| Daviess Community Hospital | Washington | (0.5) | 52.3 | -1.0% |
| Community Hospital Bremen | Bremen | (0.1) | 14.5 | -0.7% |
| Clark Memorial Hospital | Jeffersonville | (1.0) | 172.8 | -0.6% |
| Henry County Hospital | New Castle | (0.1) | 102.7 | -0.1% |
| DeKalb Memorial Hospital | Auburn | 0.7 | 56.8 | 1.2% |
| Howard Regional Health | Kokomo | 1.0 | 80.4 | 1.2% |
| Jay County Hospital | Portland | 0.5 | 35.2 | 1.4% |
| Reid Hospital | Richmond | 6.2 | 351.8 | 1.8% |
| Perry County Memorial Hospital | Tell City | 0.7 | 35.6 | 2.0% |
| Fayette Regional Health | Connersville | 1.1 | 53.4 | 2.1% |
| Rush Memorial Hospital | Rushville | 0.8 | 28.6 | 2.8% |
| Good Samaritan Hospital | Vincennes | 5.4 | 191.9 | 2.8% |
| Greene County General Hospital | Bloomfield | 0.7 | 24.4 | 2.9% |
| Memorial Hospital Jasper | Jasper | 4.9 | 155.7 | 3.1% |
| Cameron Community Hospital | Angola | 1.4 | 43.7 | 3.2% |
| Columbus Regional Hospital | Columbus | 8.2 | 233.0 | 3.5% |
| Dearborn County Hospital | Lawrenceburg | 4.7 | 133.4 | 3.5% |
| Pulaski Memorial Hospital | Winamac | 0.8 | 21.0 | 3.8% |
| Johnson Memorial Hospital | Franklin | 4.6 | 120.1 | 3.8% |
| Floyd Memorial Hospital | New Albany | 11.9 | 267.0 | 4.5% |
| St Joseph Regional Med Ctr | South Bend | 15.4 | 353.1 | 4.4% |
| Major Health Partners | Shelbyville | 6.4 | 124.6 | 5.1% |
| Woodlawn Hospital | Rochester | 2.4 | 45.5 | 5.3% |
| Hancock Regional Hospital | Greenfield | 6.8 | 124.1 | 5.5% |
| Union Hospital | Terre Haute | 26.4 | 430.2 | 6.1% |
| Sullivan County Community Hosp | Sullivan | 1.8 | 26.3 | 6.8% |
| The Methodist Hospitals | Merrillville | 26.9 | 330.4 | 8.1% |
| Marion General Hospital | Marion | 13.1 | 142.8 | 9.2% |
| Hendricks Regional Health | Danville | 26.5 | 279.5 | 9.5% |
| Jackson County Schneck Hosp | Seymour | 13.7 | 128.2 | 10.7% |
| Witham Health Services | Lebanon | 28.6 | 264.1 | 10.8% |
| Memorial Hospital Logansport | Logansport | 8.7 | 71.5 | 12.2% |
| Total all 33 Smaller except Wishard | 226.2 | 4,515.1 | 5.0% | |
| Total all 34 Smaller Including Wishard | 87.2 | 4,896.1 | 1.8% | |
| Grand Total all 43 | 1,349.1 | 20,941.8 | 6.4% |
