Tuesday, April 15, 2014

Louisiana Non-Profit Hospital Organizations Net Income Only 5.1% of Revenues in 2013 and 3.3% in 2012

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

These 3 Louisiana Non-Profit Hospital Organizations generated Total Bottom Line Net Income of a modest 5.1% of Total Operating Revenues in 2013 and an extremely modest 3.3% in 2012.

It should be pointed out that these are modest Bottom Line Profits of these largest, financially strongest Louisiana Hospital Organizations which even include very robust Investment Returns due to the hot stock market in both 2013 and in late 2012, and thus on an Operating Income (Loss) basis, these Profits are substantially lower in both 2013 and in 2012.

To illustrate this latter point, Franciscan Missionaries Our Lady Health posted Total Investment Returns of $70 mil in the 9 months ended September 2013 included in Non-Operating Income, more than triple its Total Operating Income of only $22 mil also in the same 9 months in 2013.

Below are the Bottom Line Net Income and Total Operating Revenues for each of these 3 Louisiana Non-Profit Hospital Organizations for both 2013 and 2012:

Most 2013


Recent  Bottom  2013 2013
Bottom 2012 2012

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

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

Willis-Knighton Medical Center Shreveport Sep 13          74        899 8.2%
84 862 9.7%
Franciscan Missionaries Our Lady Health Baton Rouge Jun 13          92      1,413 6.5%
15 1298 1.2%
Ochsner Health System Jefferson Sep 13          28      1,475 1.9%
18 1364 1.3%

Total all 3

       194      3,787 5.1%
       117      3,524 3.3%

More than anything, Hospital Patient Charges drive US Health Care Costs.  When you view a typical US Hospital bill for patient services, it is easy to understand why US Health Care Costs are so much higher than that in any other major country.

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 determining ultimately whether health insurance premiums are fairly priced on the health insurance exchanges.

Well, as you can see from the above very modest profit amounts along with my earlier discussion of them, Louisiana is one State whose large Non-Profit Hospital Organizations are not, for the most part, being greedy in generating high profits.

With Louisiana Hospitals generating such modest profits, a key beneficiary will be Louisiana citizens buying health insurance on the Health Insurance Exchange.  Louisiana Hospitals, for the most part, have not been nor will they 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 Health Insurance Exchange.