Tuesday, April 15, 2014

Washington DC Non-Profit Hospital Organizations Net Income Only 5.1% of Revenues in 2013 and 1.3% in 2012

From a review of the Electronic Municipal Market Access (EMMA), I found 1 Non-Profit Hospital Organization headquartered in Washington DC with Net Assets (i.e. Financial Strength or Total Assets minus Total Liabilities) at the most recent date of more than $400 mil each.  I added Sibley Memorial Hospital located in DC, but now part of Maryland-based Johns Hopkins Health, since Sibley's Net Asset amount is disclosed separately by Johns Hopkins.  In addition, I also added Maryland-based MedStar Health since its 3 DC Hospitals .....Georgetowm University Hospital, Washington Hospital Center and National Rehabilitation Network..... make up a very significant part of MedStar Health.

These 3 Washington DC connected 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 1.3% in 2012.

It should be pointed out that these are modest Bottom Line Profits of these largest, financially strongest Washington DC connected 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, Sibley Memorial Hospital posted Total Investment Returns of $60 mil in 2013 included in Non-Operating Income, as compared with its Total Operating Income of only $9 mil also in 2013.

Below are the Bottom Line Net Income and Total Operating Revenues for each of these 3 Wahington DC connected 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
Washington DC Connected Hospital Organization City HQs End  Income   Revenues  Margin
 Income   Revenues  Margin

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

Sibley Memorial Hospital Washington DC Jun 13              68            262 26.0%
             20            259 7.7%
MedStar Health Columbia, MD Jun 13            186         4,217 4.4%
             70         3,985 1.8%
Children's National Med Ctr Washington DC Jun 13              24         1,004 2.4%
            (24)            954 -2.5%

Total all 3

           278         5,483 5.1%
             66         5,198 1.3%

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, Washington DC is one place whose large Non-Profit Hospital Organizations, for the most part, are not being greedy in generating high profits.

With Washington DC Hospitals generating such modest profits, a key beneficiary will be Washington DC citizens buying health insurance on the Health Insurance Exchange.  Washington DC 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 Washington DC has wisely elected to expand Medicaid.  This will increase nearly all Washington DC Hospital profits substantially and thus permit Washington DC 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.