Washington State Non-Profit Hospital Organizations Net Income 9.8% of Revenues in 2012

From a review of audited annual financial statements shown at Electronic Municipal Market Access (EMMA), I found 8 Washington State 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.

Included in these 8 was Safety Net Hospital Harborview Medical Center.  Because of its nature, I separated it from the other 7 Hospitals and included it at the very bottom below.

These 7 Washington Non-Profit Hospital Organizations generated Total Bottom Line Net Income of a very robust 9.8% of Total Operating Revenues in 2012 and then dropped sharply to a very reasonable 4.8% in 2013.

The main contributor to these strong operating results in 2012 were Seattle Children's Healthcare and Multicare Health System, both experiencing Net Income Profit Margins north of 15.0% in 2012.  These two also posted just outstanding profits again in 2013.

The major profit change between 2012 and 2013 was giant Providence Health Services, which posted an economic gain of $805 mil in 2012 from new affiliations.

The only problem with these strong operating results in 2012 and 2013 for some of these Washington Non-Profit Hospital Organizations was that instead of taking the high road and responsibly reducing their Patient Service Pricing, these Washington Non-Profit Hospital Organizations elected to retain these excessively 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 each of these 7 Washington Non-Profit Hospital Organizations and also for Safety Net Hospital Harborview Medical Center for both 2013 and 2012:

		Most	2013				2012
		Recent	Bottom	2013	2013		Bottom	2012	2012
		Fiscal	Line	Total	Net		Line	Total	Net
		Year	Net	Operating	Income		Net	Operating	Income
Washington Hospital Organ	City HQs	End	Income	Revenues	Margin		Income	Revenues	Margin
			mil $s	mil $s	%		mil $s	mil $s	%
Non-Profit Hospitals
Seattle Children's Healthcare	Seattle	Sep 13	187	1,033	18.1%		202	982	20.6%
MultiCare Health System	Tacoma	Dec 13	288	1,707	16.9%		241	1,564	15.4%
Providence Health	Renton	Dec 13	253	11,137	2.3%		1,217	10,608	11.5%
Overlake Hospital Association	Bellevue	Dec 13	35	428	8.2%		31	419	7.4%
Univ Washington Med Center	Seattle	Jun 13	6	921	0.7%		36	878	4.1%
Virginia Mason Medical Ctr	Seattle	Dec 13	25	959	2.6%		30	934	3.2%
PeaceHealth	Vancouver	Jun 13	96	2,171	4.4%		(43)	2,186	-2.0%
Total all 7			890	18,356	4.8%		1,714	17,571	9.8%
Harborview Medical Center	Seattle	Jun 13	(14)	788	-1.8%		8	766	1.0%

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

Thus a key beneficiary of this should be Washington 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 Washington 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 some of these Washington 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 Washington's case which should drive down Health Insurance Premiums on the Health Insurance Exchange even more.  Washington 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.

To illustrate this latter point, Harborview Medical Center is a Component Unit of King County.  Thus it is a Non-Profit Governmental Hospital.  It generated a very modest Bottom Line Income of $8 mil in 2012.  Bad Debt Charges of $51 mil and Uncompensated Charity Care Costs Incurred of $95 mil both brought down this to a $8 mil Net Income.  With full Medicaid expansion in Washington State, Harborview's $8 mil Net Income would turn into a very significant Profit.....my hunch is by more than tenfold, everything else being the same.