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.
Rhode Island is one State whose 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 Rhode Island Non-Profit Hospital Organizations with Total Operating Revenues above $100 mil in the most recent year. These Rhode Island Hospital Organizations generated Total Operating Income of only $12 mil in the most recent year, which was an extremely modest 0.4% of Total Operating Revenues of $3.020 bil.
With Rhode Island Hospitals generating such incredibly modest profits, a key beneficiary will be Rhode Island citizens buying health insurance on the insurance exchange. Rhode Island 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 Rhode Island health insurance exchange is that Rhode Island has wisely elected to expand Medicaid. This will increase Rhode Island Hospital profits substantially and thus permit Rhode Island 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 Rhode Island State Insurance Exchange.
So just how much will Rhode Island Hospital Profits increase due to the ACA and the Expansion of Medicaid?
Well, these 7 Rhode Island Hospital Organization's audited financial statements show it will be very substantial.
For these 7 Rhode Island Hospital Organizations, Total Operating Income was $12 mil in the most recent year. Driving down these Operating Profits were Provisions for Bad Debts of $182 mil and Uncompensated Charity Care Costs Incurred of another $98 mil. Thus Total Operating Income exclusive of these two Earnings Charges was $292 mil, which was an off-the-charts 24 times the reported Total Operating Income of $12 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 Rhode Island Hospital Organizations:
| Operating | ||||
| Operating | Total | Income | ||
| City | Income | Operating | (Loss) | |
| HQs | (Loss) | Revenues | Margin | |
| mils $s | mils $s | % | ||
| Rhode Island Non-Profit Hospital Organizations | ||||
| Southeastern Healthcare | Pawtucket | (16) | 159 | -10.1% |
| St Joseph Health Services | Providence | (4) | 144 | -2.8% |
| Newport Health Care | Newport | (3) | 110 | -2.7% |
| Roger Williams Medical Center | Providence | 2 | 164 | 1.2% |
| Lifespan Corp | Providence | 18 | 1,465 | 1.2% |
| Care New England Health | Providence | 11 | 846 | 1.3% |
| South County Hospital Healthcare | Wakefield | 4 | 132 | 3.0% |
| Total all 7 | 12 | 3,020 | 0.4% | |
