Texas Hospitals Net Assets Up 66% Under Obama and the Affordable Care Act

From a review of the Electronic Municipal Market Access (EMMA) and SEC filings, I found 4 County District Hospitals, 15 Non-Profit Hospital Organizations other than the 4 County District Hospitals and 2 Publicly-held Hospital Companies all headquartered in the State of Texas with Net Assets (i.e. Financial Strength or Total Assets minus Total Liabilities) at the most recent date reported of more than $400 mil each.  Below here are the Net Assets of these 21 Texas Hospital Organizations shown at both the most recent reported date and also at the Fiscal Year End (FYE) closest to the beginning of the Obama Administration:

						FYE	Balance	Net
				Most		Balance	Sheet	Assets
			Most	Recent		Sheet	Net	%
			Recent	Balance		Date	Assets	Change
			Balance	Sheet		Beginning	Beginning	During
	City	State	Sheet	Net		Obama	Obama	Obama
Hospital Organization	HQs	HQs	Date	Assets		Admin	Admin	Admin
Non-Profit Hospitals				mil $s			mil $s
…..Non-County District Hospitals
The Methodist Hospital System	Houston	TX	Dec 13	4,554		Dec 08	2,375	92%
Texas Health Resources	Arlington	TX	Mar 14	3,992		Dec 08	1,921	108%
Baylor Health System	Dallas	TX	Dec 13	3,589		Jun 09	2,166	66%
Texas Children's Hospital	Houston	TX	Dec 13	3,121		Sep 09	2,088	49%
Christus Health	Irving	TX	Dec 13	2,693		Jun 09	2,119	27%
Memorial Hermann Healthcare System	Houston	TX	Dec 13	2,412		Jun 09	1,509	60%
Cook Children's Health	Fort Worth	TX	Mar 14	1,841		Sep 09	840	119%
Children's Medical Center of Dallas	Dallas	TX	Dec 13	1,733		Dec 08	821	111%
St Luke's Episcopal Health System	Houston	TX	Jun 13	1,241		Dec 08	692	79%
Methodist Health System	Dallas	TX	Dec 13	1,185		Sep 09	627	89%
Baylor College of Medicine	Houston	TX	Mar 14	1,169		Jun 09	965	21%
Scott & White Healthcare	Temple	TX	Dec 13	877		Aug 09	686	28%
Covenant Lubbock	Lubbock	TX	Jun 13	519		Jun 09	323	61%
East Texas Medical Center	Tyler	TX	Oct 13	435		Oct 08	294	48%
United Regional Health Care	Wichita Falls	TX	Dec 13	418		Dec 08	196	113%
Total all 15 Non-County District Hospitals				29,779			17,622	69%
…..County District Hospitals
Dallas County Hospital (Parkland)	Dallas	TX	Sep 13	1,275		Sep 09	962	33%
University Health (San Antonio)	San Antonio	TX	Dec 12	913		Dec 08	612	49%
Harris County Hospital District	Houston	TX	Feb 13	745		Feb 09	767	-3%
Tarrant County Hospital District	Fort Worth	TX	Sep 13	731		Sep 09	638	15%
Total all 4 County District Hospitals				3,664			2,979	23%
Publicly-held Hospitals
Tenet Healthcare	Dallas	TX	Mar 14	854		Dec 08	147	481%
Hanger	Austin	TX	Mar 14	591		Dec 08	267	121%
Total all 2 Publicly-held Hospitals				1,445			414	249%
Total all 21 Non-Profit & Publicly-held Hospital Organizations				34,888			21,015	66%

As you can see from the above chart, the Total Net Assets (Financial Strength) of these 21 Texas Hospital Organizations increased by an exceptional 66% to $34.888 bil during the average first 4.56 years so far of the Obama Administration.

The 15 Texas Non-Profit Hospital Organizations which weren't County District Hospitals had their Total Net Assets increase by an even higher 69% to $29.779 bil so far during the Obama Administration.

Very positively impacting this major increase in the Net Assets (Financial Strength) of these 21 Texas Hospital Organizations were actions taken by both the Obama Administration and the US Fed to strengthen the US Financial Foundation which was severely damaged from the financial meltdown in late 2008.

In addition, the Affordable Care Act (ACA) has also played a key role in this increase in Net Assets (Financial Strength) of these 21 Texas Hospital Organizations.

A remarkable thing is that these robust increases in Net Assets (Financial Strength) of these Texas Hospital Organizations occurred when these Hospitals were also playing very instrumental roles in the substantial annual percentage growth reduction of Total US Health Care Costs which occurred in each of the most recent three years under the ACA.

With such substantial Net Asset percentage increases of these 21 Texas Hospital Organizations, a key beneficiary of this will be Texas citizens electing to buy health insurance on the Federal Health Insurance Exchange.  This exceptional Net Asset growth gives these 21 Texas Hospital Organizations the financial flexibility to moderate their pricing for hospital procedures in their negotiations with health insurance companies which ultimately determines what insurance premium prices are set at by health insurance companies on the Health Insurance Exchange. 

University of Texas

None of the above amounts have anything to do with the University of Texas, which is also very salient to the Affordable Care Act (ACA).

The University of Texas' financial statements are comprised of nine public universities and an amazingly high number of six large Health Institutions shown below here:

• University of Texas Southwestern Medical Center
• University of Texas Medical Branch at Galveston
• University of Texas Health Science Center at Houston
• University of Texas Health Science Center at San Antonio
• University of Texas M.D. Anderson Cancer Center
• University of Texas Health Science Center at Tyler

Since these six Health Institutions are part of the University of Texas, they are Governmental Non-Profit entities....and just huge ones at that.

So just how have the finances of the University of Texas done during the Obama Administration?  Well, just incredibly well.

The University of Texas' audited financial statements have a fiscal year end of August.  Thus all of the most recent four Fiscal Years (FY) ending August 2013 were completely during the Obama Administration.

Below here are the key financial Operating Results and Net Assets (Financial Strength or Total Assets less Total Liabilities) for the University of Texas System for the most recent four fiscal years:

University of Texas System
					Total
					Four
	FY 2013	FY 2012	FY 2011	FY 2010	FYs
	mil $s	mil $s	mil $s	mil $s	mil $s
Operating Revenues	11,042	10,454	10,059	9,268	40,823
Operating Expenses	14,391	13,423	12,921	12,248	52,983
=Operating Loss	(3,349)	(2,969)	(2,862)	(2,980)	(12,160)
State Appropriations	1,829	1,919	1,857	2,087	7,692
Net Investment Income	2,128	1,948	2,246	1,431	7,753
Increase in Fair Value of Investments	2,135	1,619	1,897	1,522	7,173
Other	876	423	576	591	2,466
=Increase in Net Assets	3,619	2,940	3,714	2,651	12,924
Net Assets, Beginning of Year	33,361	30,421	26,707	24,056	24,056
Net Assets, End of Year	36,980	33,361	30,421	26,707	36,980

When I first put together the above amounts, I was in complete shock.

For the four years from September 1, 2009 to August 31, 2013.....all during the Obama Administration.....the Net Assets (Financial Strength) of the University of Texas System has increased from $24.056 bil to $36.980 bil, up $12.924 bil, or up 54%.

OK, so what was the reason for this massive $12.924 bil Net Asset enhancement of financial strength of the University of Texas System in the most recent four years of the Obama Administration?
 
It's not from operations since the Total Operating Losses for the most recent four years combined were a staggering $12.160 bil.

The Texas State Appropriations for the most recent four years combined totaled $7.692 bil, which covered only 63% of the Total Operating Losses of $12.160 bil.

Well, enter Investment Returns on the massive University of Texas System Portfolio of Investments in Stock and Debt Instruments, coupled with huge Investments in their related Financial Derivatives.

Amazingly, for the most recent four years, the University of Texas System received a massive economic benefit of $7.753 bil in Total Investment Income and an additional $7.173 bil in the Total Appreciation in the Fair Value of its Investments.  Yeah, the University of Texas System received $14.9 bil of Total Investment Returns and thus also Increases in its Net Assets for those four years and it happened primarily because the Obama Administration, with much help from Ben Bernanke and Janet Yellen, rescued the US economy from its free fall after the massive financial meltdown in late 2008.

And with the huge run-up in the US stock market since August 31, 2013, my hunch is that the University of Texas System's present Total Net Assets are close to $40 bil.

And the overwhelming majority of Texans hate Obama.  Go figure.

Which takes me to the six Health Institutions included in the University of Texas System's financial statements.  Just how much did they contribute to the massive $12.160 bil of Operating Losses of the most recent four years?

Below here are the Total Operating Revenues and Total Operating Expenses of these University of Texas Health Institutions:

University of Texas System: Hospital and Clinic Operating Results
					Total
					Four
	FY 2013	FY 2012	FY 2011	FY 2010	FYs
	mil $s	mil $s	mil $s	mil $s	mil $s
Hospital and Clinic Operating Revenues	4,472	4,138	3,812	3,433	15,855
Hospital and Clinic Operating Expenses	4,004	3,677	3,315	3,148	14,144
=Hospital Operating Income	468	461	497	285	1,711
Hosp Oper Income as % of Hosp Oper Revenues	10.5%	11.1%	13.0%	8.3%	10.8%

To test the reasonableness of the above Total Hospital Operating Income amounts of $468 mil in 2013 and $461 mil in 2012, I reviewed the American Hospital Directory and it showed that The University of Texas M.D. Anderson Cancer Center generated $291 mil of Net Income and The University of Texas Medical Branch at Galveston generated $109 mil of Net Income, both in the most recent year AHD reported it.  Any reasonable estimate of the Profit Margin as a Percentage of Total Operating Revenues for both of them would be substantially higher than 10%.  This is flat out crazy for a Non-Profit, Governmental Hospital.

So the $12.160 bil of Total Operating Losses of the most recent four years of the University of Texas System increases to $13.871 bil, when the Total Hospital Operating Income of $1.711 bil is excluded.  Thus, the Hospital Operating Profits are funding $1.711 bil of the University of Texas System Total Operating Losses just over the past four years.

And yeah, the Total Hospital Operating Income.....and this is exclusive of the huge Investment Returns related to the Health Institutions.....of the University of Texas is a massive 10.8% of its Hospital Operating Revenues over the most recent four years.  As a comparison, the 30 Dow Industrials had a Total Bottom Line Profit as a % of Total Revenues which was lower than this 10.8%.  Go figure.  It tells you why the US has a huge Health Care Cost problem and it also tells you that the Hospital Patients and the Businesses and the US Government covering them are all getting totally ripped off by the University of Texas exorbitant pricing of hospital procedures.

Unfortunately, the University of Texas doesn't disclose how much of its Total Net Assets of $36.980 bil at August 31, 2013 relates to its Health Institutions.  But by any reasonable with and without computation, the Health Institution portion of this $36.980 bil of Net Assets at August 31, 2013 has to be a very significant percentage.  It's not just the huge Total Hospital Operating Income earned over decades and decades, but even more importantly, its the huge Total Investment Returns earned over decades and decades from the Investments generated from these Hospital Operating Profits.

Frankly, I think it is obscene for a Public Non-Profit University to have Total Net Assets of close to $40 bil, particularly so if a good chunk of it was earned from Hospital Patients, and from Businesses and the US Government (thus in essence also from all US taxpayers) covering these Patients.  This $40 bil is not the University of Texas's money.  Since Texas is a Public State University, and a Component of the Texas State Government, it instead is the money of the citizens of the State of Texas, many of whom paid to go to college there and paid to get treated in Hospitals there.

And is it really right for the University of Texas college graduates' student debt to be funding a good chunk of this $40 bil of University of Texas Net Assets, which are sitting in their massive treasure chest of Investments in Stocks and Bonds?

Which takes me finally to a very positive aspect of the extremely high University of Texas Hospital Operating Profits and Investment Returns as well as the resultant massive build-up of the Net Assets of the University of Texas Health Institutions.

With such substantial Total Net Assets dollar and percentage increases of the University of Texas Health Institutions, a key beneficiary of this will be Texas citizens electing to buy health insurance on the Health Insurance Exchange.  This exceptional Net Asset growth gives these University of Texas Hospital Organizations the financial flexibility to moderate their pricing for hospital procedures in their negotiations with health insurance companies which ultimately determines what insurance premium prices are set at by health insurance companies on the Health Insurance Exchange. 

Texas Safety Net County District Hospitals

The 7 Texas County District Hospitals with the largest Operating Losses in their most recent year are shown in the chart below:

	Texas	Operating	Total
	City	Income	Operating
Texas County District Hospitals	HQs	(Loss)	Revenues
		mils $s	mils $s
Harris	Houston	(560)	593
Dallas (Parkland)	Dallas	(433)	1,235
Tarrant	Fort Worth	(291)	442
Bexar	San Antonio	(195)	773
Ector	Odessa	(41)	211
El Paso	El Paso	(18)	376
Nacogdoches	Nacogdoches	(15)	74
Total all 7		(1,553)	3,704

So for just the one year, these 7 Texas Safety Net County District Hospitals posted Total Operating Losses of a massive $1.553 bil. 

By far the best and only way to solve this financially devastating problem is for the State of Texas to fully expand Medicaid.  If Texas did this, with the resultant massive inflow of Patient Revenues from Medicaid expansion, these 7 Texas Safety Net County District Hospitals would be able to turn these massive losses into profits.

One of the key beneficiaries of this very healthy improvement in the Total Net Assets of these 7 Texas Safety Net County District Hospitals would be Texas citizens electing to buy health insurance on the Health Insurance Exchange.  This exceptional Net Asset growth from Medicaid expansion would give these 7 Texas Safety Net County District Hospitals, and frankly all Texas Hospitals, the financial flexibility to moderate their pricing for hospital and other health care procedures in their negotiations with health insurance companies which ultimately determines what insurance premium prices are set at by health insurance companies on the Health Insurance Exchange.  

How Texas Hospitals are moderating Health Insurance Premiums on the Insurance Exchange is explained very well in this December 2013 post I made:

Many Texas Hospitals Are Facilitating Moderate Health Insurance Premium Prices on Insurance Exchange