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.
New Jersey 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 New Jersey Non-Profit Hospital Organizations with Net Assets above $400 mil. These 7 New Jersey Hospital Organizations generated Total Operating Income of $413 mil in the most recent year, which was a modest 4.4% of Total Operating Revenues of $9.298 bil. These modest Operating Margin Percentages were across the board with the highest Operating Income Margin of the 7 being only 5.9%.
With New Jersey Hospitals generating such modest profits, a key beneficiary will be New Jersey citizens buying health insurance on the Federal insurance exchange. New Jersey 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.
Another factor which will help keep insurance premium prices reasonable in the health insurance exchange for New Jersey residents is that New Jersey has wisely elected to expand Medicaid. This will increase New Jersey Hospital profits substantially and thus permit New Jersey 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 New Jersey citizens on the Federal Insurance Exchange.
So just how much will New Jersey Hospital Profits increase due to the ACA and the Expansion of Medicaid?
Well, these 7 New Jersey Hospital Organization's audited financial statements show it will be huge.
For these 7 New Jersey Hospital Organizations, Total Operating Income was $413 mil in the most recent year. Driving down these Operating Profits were Provisions for Bad Debts of $450 mil and Uncompensated Charity Care Costs Incurred of another $528 mil. Thus Total Operating Income exclusive of these two Earnings Charges was $1.391 bil, which was more than 3 times the reported Total Operating Income of $413 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 New Jersey Hospital Organizations:
| Operating | ||||
| Total | Income | |||
| City | Operating | Operating | Profit | |
| HQs | Income | Revenues | Margin | |
| mils $s | mils $s | % | ||
| New Jersey Non-Profit Hospital Organizations | ||||
| AtlantiCare Regional Medical Ctr | Galloway | 20 | 644 | 3.1% |
| Robert Wood Johnson Univ Hosp | New Brunswick | 27 | 780 | 3.5% |
| Meridian Hospitals | Red Bank | 53 | 1,361 | 3.9% |
| AHS Hospital | Morristown | 59 | 1,498 | 3.9% |
| Virtua Health | Marlton | 47 | 1,137 | 4.1% |
| Hackensack Univ Medical Ctr | Hackensack | 57 | 1,348 | 4.2% |
| Barnabas Health | West Orange | 150 | 2,530 | 5.9% |
| Total all 7 | 413 | 9,298 | 4.4% | |
