Tuesday, April 15, 2014

Kentucky Non-Profit Hospital Organizations Net Income 8.1% of Revenues in 2013

From a review of audited annual financial statements shown at Electronic Municipal Market Access (EMMA), I found 4 Kentucky Non-Profit Hospital Organizations with Net Assets above $400 mil each.

These 4 Kentucky Non-Profit Hospital Organizations generated Total Bottom Line Net Income of a very robust 8.1% of Total Operating Revenues in 2013.

Saint Elizabeth Medical Center hasn't released its December 2013 financial statements yet to EMMA, thus its below operating results for 2013 are for its 9 months ended September 2013.

Three of the 4 Kentucky Non-Profit Hospital Organizations had Net Income Margins above 8% in 2013.

Baptist Healthcare System's 2013 operating results benefited from a $148 mil economic gain from a new affiliation. 

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

Below are the Bottom Line Net Income and Total Operating Revenues for these 4 Kentucky Non-Profit Hospital Organizations for 2013:

Most 2013

Recent  Bottom  2013 2013

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

 mil $s   mil $s  %
Non-Profit Hospitals

Saint Elizabeth Medical Ctr Edgewood Dec 13          88        722 12.2%
Baptist Healthcare System Louisville Aug 13        201      1,892 10.6%
UK HealthCare Hospital System Lexington Jun 13          79        951 8.3%
Norton Health Care Louisville Dec 13          57      1,690 3.4%

Total all 4

       425      5,255 8.1%

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

Thus a key beneficiary of this should be Kentucky citizens electing to buy health insurance on the Health Insurance Exchange.  This exceptional Net Asset growth driven by these high Bottom Line Profits gives these Kentucky 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 high profits earned by these Kentucky 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 Kentucky's case which should drive down Health Insurance Premiums on the Health Insurance Exchange even more.  Despite overwhelming pressure from US Senators Mitch McConnell and Rand Paul and also from heavy lobbying by Kentucky Health Insurance giant Humana, the State of Kentucky decided that instead, the right thing to do for Kentucky citizens and for the Kentucky economy was to pass full Medicaid expansion.  And there is a key side benefit to full expansion of Medicaid in Kentucky.....it increases nearly every Hospital's profits so much that Hospitals just have to reduce their Hospital charges 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.