Friday, December 27, 2013

North Carolina Hospitals Are Moderating Health Insurance Premium Prices on Insurance Exchange

More than anything, Hospital Patient Charges drive US Health Care Costs.  When you view a typical US Hospital bill for patient services, it is easy to understand why US Health Care Costs are so much higher than that in any other major country.

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.

There are several North Carolina Non-Profit Hospital Organizations connected with Universities.....University of North Carolina Hospitals, Duke University Health and Vidant Health (previously named University Health Systems of Eastern Carolina).....which have been a bit greedy with their Operating Earnings in the most recent fiscal year.  But the rest of the North Carolina Non-Profit Hospital Organizations have not.

From a review of audited financial statements in the Electronic Municipal Market Access (EMMA), I found 27 North Carolina Non-Profit Hospital Organizations with Total Operating Revenues above $10 mil in the most recent year. 

These 27 North Carolina Non-Profit Hospital Organizations generated Total Operating Income of $1.011 bil in the most recent fiscal year, which was a modest 4.3% of Total Operating Revenues of $23.505 bil.

Of the 27 North Carolina Non-Profit Hospital Organizations, 19 of them had Operating Income Margins as a Percentage of Total Operating Revenues below 5.0% each, with a Total Operating Margin of only 2.1% for these 19.

And 24 of the 27 had Operating Income Margins of less than 6.3%.

With so many of these North Carolina Hospitals generating Operating Income Margins below 5.0% and even some others just slightly above 5.0%, a key beneficiary of this will be North Carolina citizens buying health insurance on the Federal insurance exchange.  These North Carolina 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, North Carolina has decided to not expand Medicaid.  If North Carolina 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 North Carolina residents in the Federal health insurance exchange.  This North Carolina Medicaid Expansion would increase North Carolina Hospital profits substantially and thus permit North Carolina 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 North Carolina residents on the Federal Health Insurance Exchange.

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

Well, these 27 North Carolina Hospital Organization's audited financial statements show it will be huge.

For these 27 North Carolina Hospital Organizations, Total Operating Income was $1.011 bil in the most recent fiscal year.  Driving down these Operating Profits were Provisions for Bad Debts of a huge $1.456 bil and Uncompensated Charity Care Costs Incurred of another $1.017 bil, both just for 14 of the 27 Hospital Organizations.  Thus Total Operating Income exclusive of these two Earnings Charges was $3.484 bil, which was 3.4 times the reported Total Operating Income of $1.011 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 the Audited Operating Income or Loss, Total Operating Revenues and Operating Income (Loss) Margin Percentage in the most recent year for each of these 27 North Carolina Non-Profit Hospital Organizations:




 Operating 

 Operating  Total  Income 

City  Income  Operating  (Loss) 

HQs  (Loss)  Revenues Margin


mils $s mils $s %
North Carolina Non-Profit Hospital Organizations







Wake Forest Baptist Hosp Winston-Salem            (57)         1,895 -3.0%
High Point Regional Health High Point              (6)            275 -2.3%
Scotland Healthcare Laurinburg              (2)            123 -2.0%
Halifax Regional Med Ctr Roanoke Rapids              -                94 0.0%
Chatham Memorial Hospital Elkin               1              85 0.6%
Nash Health Care Rocky Mount               2            220 0.9%
Harnett Health Dunn               1              87 1.3%
Wilson Medical Center Wilson               2            137 1.3%
Stanley Health Services Albemarle               3            135 1.9%
ARMC Health Care Burlington               5            251 1.9%
Cape Fear Valley Health Fayetteville              14            703 2.0%
Cone Health Greensboro              21         1,022 2.1%
Appalachian Regnl Hlthcare Boone               5            154 3.2%
CaroMont Health Gastonia              17            484 3.5%
Blue Ridge Healthcare Morganton               8            224 3.7%
Carolinas Health Care Charlotte            168         4,194 4.0%
New Hanover Wilmington              29            667 4.3%
FirstHealth Carolinas Pinehurst              25            525 4.8%
Southeastern Regnl Med Ctr Lumberton              14            286 4.9%
WakeMed Health Raleigh              55         1,089 5.1%
Novant Health Winston-Salem            185         3,555 5.2%
Mission Health System Asheville              56         1,054 5.3%
Wayne Health Goldsboro              12            213 5.4%
Rex Healthcare Raleigh              45            731 6.2%
Vidant Health Greenville            112         1,551 7.2%
Duke University Health Durham            184         2,539 7.2%
Univ North Carolina Hosps Chapel Hill            114         1,212 9.4%





Total all 27
        1,011       23,505 4.3%