Saturday, April 12, 2014

Arizona Non-Profit Hospital Organizations Net Income 14.8% of Revenues in 2013 and 12.2% in 2012

 From a review of audited annual financial statements shown at Electronic Municipal Market Access (EMMA), I found 3 Arizona Non-Profit Hospital Organizations with Net Assets above $400 mil each and which had or will very shortly have audited financial statements in each of the most recent 4 years.

One of these 3 Arizona Non-Profit Hospitals.....Scottsdale Healthcare.... still hasn't published its September 2013 financial statements yet and thus I only included for 2013 below its 9 months ended June 30, 2013 operating data.  When it publishes its September 2013 financial statements, I'll then update the amounts included in the chart below. 

These 3 Arizona Non-Profit Hospital Organizations generated Total Bottom Line Net Income of an spectacular 14.8% of Total Operating Revenues in 2013 and of another spectacular 12.2% in 2012.  These exceptionally strong Net Income Margins even exceeded by quite a bit that of the 30 Dow Industrials combined.

The main contributor to these outstanding operating results in both 2013 and in 2012 was Banner Health.

The only problem with these exceptional operating results in both 2013 and in 2012 was that instead of taking the high road and responsibly reducing their Patient Service Pricing, these Arizona Non-Profit Hospital Organizations elected to retain these excessively high Bottom Line Profits, which also added to both their Net Assets and treasure chest of Investments in Stocks and Bonds.

Below are the Bottom Line Net Income and Total Operating Revenues for each of these 3 Arizona Non-Profit Hospital Organizations for 2013, for 2012 and for the most recent 4 years combined: 










4 Year



Most 2013


2012


2010-13 4 Year 4 Year


Recent Bottom 2013 2013
Bottom 2012 2012
Bottom 2010-13 2010-13


Fiscal Line Total Net
Line Total Net
Line Total Net
Year Net Operating Income
Net Operating Income
Net Operating Income
Arizona Hospital Organ City HQs End Income Revenues Margin
Income Revenues Margin
Income Revenues Margin



mil $s mil $s %
mil $s mil $s %
mil $s mil $s %
Non-Profit Hospitals












Banner Health Phoenix Dec 13     833     5,085 16.4%
    601     4,866 12.4%
    1,841     19,308 9.5%
Northern Arizona Healthcare Flagstaff Jun 13       54        535 10.1%
      53        517 10.3%
       238       2,058 11.6%
Scottsdale Healthcare Scottsdale Sep 13       39        652 6.0%
    109        851 12.8%
       209       3,161 6.6%














Total all 3

    926     6,272 14.8%
    763     6,234 12.2%
    2,288     24,527 9.3%

There is a very positive aspect to these excessively high Bottom Line Profits of these Arizona Non-Profit Hospital Organizations.  These incredibly high Profits are getting added to the Net Assets (Financial Strength) of these Arizona Hospital Organizations.

Thus a key beneficiary of this should be Arizona citizens electing to buy health insurance on the Health Insurance Exchange.  This exceptional Net Asset growth driven by these exceedingly high Bottom Line Profits gives these Arizona Hospital Organizations 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.

And armed with audited financial data concerning the excessively high profits earned by these large Arizona Non-Profit Hospital Organizations, Health Insurance Companies should be able to do a much better job in representing their policy holders, including those getting Health Insurance on the Health Insurance Exchange.

And there's an added factor in Arizona's case which should drive down Health Insurance Premiums on the Health Insurance Exchange even more.  Arizona passed full Medicaid expansion and there is an additional real beauty with full Medicaid expansion.  It increases nearly every Hospital's profits so much that Hospitals just have to reduce their Hospital charges very substantially and they also will be much more reasonable in negotiating Hospital Charges with Health Insurance Companies.  Thus it is only logical that this will also result in much lower Health Insurance Premiums on the Health Insurance Exchange.





Details to come.