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.
Washington 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 Washington State Non-Profit Hospital Organizations with Net Assets above $400 mil. When I exclude Seattle Children's Health Care, that leaves 3. In addition, I found 3 additional ones with Net Assets above $400 mil by reviewing the Washington State Dept of Health website. These 6 Washington State Non-Profit Hospital Organizations generated Total Operating Income of $527 mil in the most recent year, which was a modest 3.2% of Total Operating Revenues of $16.659 bil.
With Washington State Hospitals generating such modest profits, a key beneficiary will be Washington citizens buying health insurance on the insurance exchange. Washington 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 Washington State health insurance exchange is that Washington has wisely elected to expand Medicaid. This will increase Washington Hospital profits very significantly and thus permit Washington 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 Washington State Insurance Exchange.
So just how much will Washington State Hospital Profits increase due to the ACA and the Expansion of Medicaid?
Well, for these 6 Washington State Hospital Organizations, Total Operating Income was $527 mil in the most recent year. Driving down these Operating Profits were Provisions for Bad Debts of $809 mil. Thus Total Operating Income exclusive of Provision for Bad Debts was $1.336 bil. In addition, a combination of Uncompensated Charity Care Costs Incurred and Charity Care Charges Foregone were another $713 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 6 large Washington State Non-Profit Hospital Organizations:
| Operating | ||||
| Operating | Total | Income | ||
| City | Income | Operating | (Loss) | |
| HQs | (Loss) | Revenues | Margin | |
| mils $s | mils $s | % | ||
| Washington Non-Profit Hospital Organizations | ||||
| PeaceHealth | Vancouver | 10 | 2,171 | 0.5% |
| Providence Health | Renton | 204 | 10,608 | 1.9% |
| Harborview Medical Center | Seattle | 18 | 766 | 2.3% |
| University Washington Med Ctr | Seattle | 59 | 877 | 6.7% |
| MultiCare Health | Tacoma | 159 | 1,564 | 10.2% |
| Tacoma General | Tacoma | 77 | 673 | 11.4% |
| Total all 6 | 527 | 16,659 | 3.2% | |
