Monday, December 30, 2013

Nearly All Alabama Hospitals Are Driving Down Health Insurance Premium Prices on Federal Insurance Exchange

From a review of audited financial statements in the Electronic Municipal Market Access (EMMA), I found 18 Alabama Non-Profit Hospital Organizations, including Governmental Hospitals, with Total Operating Revenues above $10 mil in the most recent year reported.  After excluding Children's Hospital Alabama and Long-term Acute Hospital Noland Health, that leaves 16.

These 16 Alabama Non-Profit Hospital Organizations generated Total Operating Income of $164 mil in the most recent year reported, which was a very modest 3.1% of Total Operating Revenues of $5.332 bil.

Of these 16 Alabama Non-Profit Hospital Organizations, 15 of them had Operating Income Margins of 5.5% or less, for a Total Operating Income Margin for these 15 of an extremely modest 1.4%.

With nearly all of these Alabama Hospitals generating Operating Income Margins of 5.5% and below, a key beneficiary of this will be Alabama citizens buying health insurance on the Federal insurance exchange.  These Alabama 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 Federal insurance exchange. 

So far, Alabama has decided to not expand Medicaid, even though polls have shown that clearly more than half of its State citizens favor full expansion of Medicaid.  If Alabama changed its mind and decided to fully Expand Medicaid, then the consequences of this action would be to significantly drive down insurance premium prices even more for Alabama residents in the Federal health insurance exchange.  This Alabama Medicaid Expansion would increase Alabama Hospital profits substantially and thus permit Alabama 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 Alabama residents on the Federal Health Insurance Exchange.

So just how much would Alabama Hospital Profits increase due to the ACA and the Expansion of Medicaid?

Well, these 16 Alabama Hospital Organization's audited financial statements show it will be huge.

For these 16 Alabama Hospital Organizations, Total Operating Income was $164 mil in the most recent fiscal year.  Driving down these Operating Profits were Provisions for Bad Debts of a huge $1.115 bil.  Thus Total Operating Income Before these Provisions for Bad Debts was $1.279 bil, which was nearly 8 times reported Total Operating Income of $164 mil.  But there's more to this story.  Total Uncompensated Charity Care Charges Foregone by these 16 Alabama Hospital Organizations totaled another $672 mil in the most recent year. 

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 the Audited Operating Income or Loss, Total Operating Revenues and Operating Income (Loss) Margin Percentage in the most recent year for each of these 16 Alabama Non-Profit Hospital Organizations:





 Operating 

 Operating  Total  Income 

City  Income  Operating  (Loss) 

HQs  (Loss)  Revenues  Margin 


mils $s mils $s  % 
Alabama Non-Profit Hospital Organizations








Henry County Health Care Auth Abbeville         (0.6)           11 -5.5%
Bibb County Health Care Auth Centreville         (0.6)           14 -4.3%
Jackson County Health Care Auth Scottsboro         (2.2)           52 -4.2%
Monroe County Health Care Auth Monroeville         (0.8)           22 -3.6%
Marshall County Health Auth Guntersville         (1.9)         130 -1.5%
Infirmary Health System Mobile         (7.7)         597 -1.3%
Baptist Health System Birmingham         (6.1)         529 -1.2%
Colbert County NW Health Care Auth Sheffield         (1.1)           99 -1.1%
Houston County Health Auth Dothan          3.3         283 1.2%
Baptist Health Care Authority Montgomery        14.2         544 2.6%
DCH Health Care Authority Tuscaloosa        14.0         454 3.1%
East Alabama Health Care Auth Opelika          9.1         276 3.3%
City of Huntsville Health Care Auth Huntsville        32.7         969 3.4%
Cullman County Health Care Auth Cullman          3.6           93 3.9%
Sylacauga Health Care Auth Sylacauga          3.1           56 5.5%
UAB Health Birmingham      104.8      1,203 8.7%





Total all 16
     163.8      5,332 3.1%