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.
Well, one State whose Non-Profit Hospitals are not being greedy in generating high operating profits is the progressive State of Maryland. Let me explain.
The State of Maryland, probably more than any other US State, is being very transparent with its citizens by having available for review annually at the Maryland Health Services Cost Review Commission website audited financial statements for each of its Hospitals. These audited financial statements are due annually 120 days after the Hospital's fiscal year ends. A key purpose of these audited financial statements is for reconciliation with submitted annual cost report data.
So just how effective has Maryland's Health Services Cost Review Commission been?
Well, in the most recent year, which ended on June 30, 2013 for nearly all of them, all of these Maryland Hospitals combined generated Total Operating Income of $320.712 mil, which was an extremely modest 1.9% of their Total Operating Revenues of $16.823 bil.
It's pretty clear to me that Maryland's Health Services Cost Review Commission has been very effective in preventing excess profits to accumulate on the books of Non-Profit Hospital Organizations.
If we could get other US States to follow Maryland's lead here, US Health Care Costs would drop precipitously.
With Maryland Hospitals generating such modest profits, a key beneficiary will be Maryland citizens buying health insurance on the insurance exchange. Maryland 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 Maryland health insurance exchange is that Maryland has wisely elected to expand Medicaid. This will increase Maryland Hospital profits substantially and thus permit Maryland 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 Maryland State Insurance Exchange.
So just how much will Maryland Hospital Profits increase due to the ACA and the Expansion of Medicaid?
Well, Maryland Hospital audited financial statements show it will be huge.
For all Maryland Hospitals, Total Operating Income was $321 mil in the most recent year. Driving down these Operating Profits were Provisions for Bad Debts of $782 mil and Uncompensated Charity Care Costs Incurred of another $412 mil. Thus Total Operating Income exclusive of these two Earnings Charges was $1.515 bil, which is nearly 5 times the reported Total Operating Income of $321 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 the Maryland Hospitals:
| Operating | |||
| Operating | Total | Income | |
| Income | Operating | (Loss) | |
| Maryland Hospital Name | (Loss) | Revenues | Margin |
| $000s | $000s | % | |
| Southern Maryland Hospital | (7,049) | 213,409 | -3.3% |
| Doctors Community Hosp | (2,717) | 195,874 | -1.4% |
| Peninsula Regional Health | (4,266) | 370,301 | -1.2% |
| Dimensions Health | (3,485) | 365,942 | -1.0% |
| John Hopkins Bayview Med Ctr | (3,944) | 534,517 | -0.7% |
| Mercy Health Services | (4,285) | 602,348 | -0.7% |
| University Maryland Medical | (13,780) | 2,571,446 | -0.5% |
| Meritus Medical Center | 164 | 374,535 | 0.0% |
| Atlantic General Hospital | 410 | 87,494 | 0.5% |
| Anne Arundel Health | 2,824 | 572,422 | 0.5% |
| Frederick Regional Health | 3,165 | 349,967 | 0.9% |
| Brook Lane Health Services | 258 | 22,817 | 1.1% |
| MedStar Health | 78,800 | 4,217,200 | 1.9% |
| Lifebridge Health | 20,173 | 1,033,958 | 2.0% |
| Sheppard&Enoch Pratt Foundation | 8,207 | 318,750 | 2.6% |
| Calvert Health System | 3,969 | 138,444 | 2.9% |
| Edward McCready Meml Hosp | 465 | 14,938 | 3.1% |
| Garrett County Meml Hosp | 1,286 | 40,449 | 3.2% |
| Union Hospital of Cecil County | 4,958 | 146,093 | 3.4% |
| John Hopkins Hospital | 70,219 | 1,948,222 | 3.6% |
| Carroll County Health | 10,704 | 285,540 | 3.7% |
| Greater Baltimore Med Ctr | 14,934 | 393,997 | 3.8% |
| Western Maryland Health | 12,699 | 301,081 | 4.2% |
| Howard County Genl Hosp | 13,982 | 235,995 | 5.9% |
| Holy Cross Health | 24,150 | 404,045 | 6.0% |
| Ascension Health-St Agnes | 26,647 | 413,102 | 6.5% |
| Hartford Hosp&Upper Chesapeake Med Ctr | 22,117 | 331,499 | 6.7% |
| Mt Washington Pediatric Hosp | 5,394 | 54,019 | 10.0% |
| Suburban Hospital | 34,713 | 284,854 | 12.2% |
| Total all 29 | 320,712 | 16,823,258 | 1.9% |
