One reason US Hospital bills are so high is that many of the larger Hospitals Systems set their pricing for hospital procedures so that they make a lot of money.
Thus, US Hospitals are playing a key role in ultimately determining whether health insurance premiums are fairly priced on the health insurance exchanges.
Well, the State of Kentucky Hospitals did not generate high Operating Profits in the most recent year.
From a review of audited financial statements in the Electronic Municipal Market Access (EMMA), I found 6 Kentucky Non-Profit Hospital Organizations with Net Assets above $200 mil.
These 6 large Kentucky Non-Profit Hospital Organizations generated Total Operating Income of $126 mil in the most recent year reported, which was an exceedingly modest 2.2% of Total Operating Revenues of $5.634 bil.
And this very modest Operating Income Margins were across the board, with the highest one being 7.9%.
With all of these Kentucky Hospitals generating such low Operating Income Margins, a key beneficiary of this will be Kentucky citizens buying health insurance on Kentucky's very well functioning State Health Insurance Exchange. These Kentucky 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 Kentucky State Health Insurance exchange.
Another factor which will help keep insurance premium prices reasonable in the health insurance exchange is that Kentucky has wisely elected to fully expand Medicaid. This will increase Kentucky Hospital profits substantially and thus permit Kentucky 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 Kentucky State Insurance Exchange.
So just how much will Kentucky Hospital Profits increase due to the ACA and the Expansion of Medicaid?
Well, these 6 Kentucky Hospital Organization's audited financial statements show it will be huge.
For these 6 Kentucky Hospital Organizations, Total Operating Income was $126 mil in the most recent fiscal year. Driving down these Operating Profits were Provisions for Bad Debts of $310 mil and Uncompensated Charity Care Costs Incurred of another $165 mil. Thus Total Operating Income exclusive of these two Earnings Charges was $601 mil, which was nearly 5 times the reported Total Operating Income of $126 mil.
Granted not all of these two Earnings Charges will be eliminated with ACA and Medicaid Expansion, but a substantial portion of them will.
Below here are the Audited Operating Income or Loss, Total Operating Revenues and Operating Income (Loss) Margin Percentage in the most recent year for each of these 6 large Kentucky Non-Profit Hospital Organizations:
| Operating | ||||
| Operating | Total | Income | ||
| City | Income | Operating | (Loss) | |
| HQs | (Loss) | Revenues | Margin | |
| mils $s | mils $s | % | ||
| Kentucky Non-Profit Hospital Organizations | ||||
| Owensboro Medical Health | Owensboro | (20) | 429 | -4.7% |
| Norton Healthcare | Louisville | 19 | 1,675 | 1.1% |
| Baptist Healthcare | Louisville | 23 | 1,647 | 1.4% |
| Ashland Hospital | Ashland | 10 | 553 | 1.8% |
| Saint Elizabeth Medical Ctr | Louisville | 65 | 965 | 6.7% |
| Commonwealth Health | Bowling Green | 29 | 365 | 7.9% |
| Total all 6 | 126 | 5,634 | 2.2% | |
