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.
Oregon is one State whose Non-Profit Hospital Organizations are generally not being greedy in generating high operating profits.
From a review of audited financial statements in the Electronic Municipal Market Access (EMMA), I found 4 Oregon Non-Profit Hospital Organizations with Net Assets above $400 mil. These 4 Oregon Non-Profit Hospital Organizations generated Total Operating Income of $264 mil in the most recent year, which was a modest 4.0% of Total Operating Revenues of $6.567 bil.
With Oregon Hospitals generating such modest profits, a key beneficiary will be Oregon citizens buying health insurance on the insurance exchange. Oregon 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 Oregon State health insurance exchange is that Oregon has wisely elected to expand Medicaid. This will increase Oregon Hospital profits very significantly and thus permit Oregon 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 Oregon State Insurance Exchange.
So just how much will Oregon Hospital Profits increase due to the ACA and the Expansion of Medicaid?
Well, for these 4 Oregon Hospital Organizations, Total Operating Income was $264 mil in the most recent year. Driving down these Operating Profits were Provisions for Bad Debts of $193 mil. Thus Total Operating Income exclusive of Provision for Bad Debts was $457 mil. In addition, a combination of Uncompensated Charity Care Costs Incurred and Charity Care Charges Foregone were another $199 mil.
Granted not all of these two huge Earnings Charges will be eliminated with ACA and Medicaid Expansion, but a very significant 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 4 large Oregon Non-Profit Hospital Organizations:
| Total | Operating | |||
| City | Operating | Operating | Income | |
| HQs | Income | Revenues | Margin | |
| mils $s | mils $s | % | ||
| Oregon Non-Profit Hospital Organizations | ||||
| Providence Health Oregon Region | Portland | 68 | 2,515 | 2.7% |
| Legacy Health | Portland | 49 | 1,365 | 3.6% |
| Asante Health | Medford | 22 | 517 | 4.3% |
| Oregon Health & Science University | Portland | 125 | 2,170 | 5.8% |
| Total all 4 | 264 | 6,567 | 4.0% | |
