Thursday, April 17, 2014

North Dakota Non-Profit Hospital Organizations Net Income Only 3.6% of Revenues in both 2013 and 2012

From a review of the Electronic Municipal Market Access (EMMA), I found 2 Non-Profit Hospital Organizations headquartered in the State of North Dakota with Net Assets (i.e. Financial Strength or Total Assets minus Total Liabilities) at the most recent date of more than $150 mil each.  In addition, Sioux Falls, SD headquartered Sanford Health has 2 of its 4 Regional Medical Centers located in North Dakota and thus has been included here too.

These 3 North Dakota Non-Profit Hospital Organizations generated Total Bottom Line Net Income of a very modest 3.6% of Total Operating Revenues in both 2013 and 2012.

Sanford Health's Bottom Line Earnings in 2013 included an economic gain on new affiliations of $120 mil.

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



Recent  Bottom  2013 2013
 Bottom  2012 2012

Fiscal  Line   Total  Net
 Line   Total  Net
Year  Net   Operating  Income
 Net   Operating  Income
North Dakota Hosp Organ City HQs End  Income   Revenues  Margin
 Income   Revenues  Margin

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

Sanford Health Fargo & Bismark Dec 13            134         3,106 4.3%
             91         2,517 3.6%
Altru Health System Grand Forks Dec 13            8        455 1.8%
             16            451 3.5%
St. Alexius Medical Center Bismark Jun 13           (2)        299 -0.7%
             10            285 3.5%

Total of all 3

       140      3,860 3.6%
       117      3,253 3.6%

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, North Dakota is one State whose larger Non-Profit Hospital Organizations, for the most part, are not being greedy in generating high profits.

With North Dakota Hospitals generating such very modest profits, a key beneficiary will be North Dakota citizens buying health insurance on the Health Insurance Exchange.  North Dakota 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. 

Another factor which will help keep insurance premium prices reasonable in the Health Insurance Exchange is that North Dakota has wisely elected to expand Medicaid.  This will increase nearly all North Dakota Hospital profits substantially and thus permit North Dakota Hospitals to be even more reasonable in their negotiations with health insurance companies on pricing for hospital and other health care procedures which ultimately drives what health insurance premiums are set at by health insurers on the Health Insurance Exchange.