Massachusetts Non-Profit Hospitals Net Assets Up 55% Under Obama and the Affordable Care Act and Profits Are Very Reasonable.....Clearly Not Excessive

From a review of the Electronic Municipal Market Access (EMMA), I found 11 Non-Profit Hospital Organizations headquartered in the State of Massachusetts with Net Assets (i.e. Financial Strength or Total Assets minus Total Liabilities) at the most recent date of more than $400 mil each.  Below here are the Net Assets of these 11 at both the most recent reported date and also at the Fiscal Year End (FYE) closest to the beginning of the Obama Administration:

						FYE	Balance	Net
				Most		Balance	Sheet	Assets
			Most	Recent		Sheet	Net	%
			Recent	Balance		Date	Assets	Change
			Balance	Sheet		Beginning	Beginning	During
	City	State	Sheet	Net		Obama	Obama	Obama
Hospital Organization	HQs	HQs	Date	Assets		Admin	Admin	Admin
				mil $s			mil $s
Partners Healthcare System	Boston	MA	Jun 14	7,463		Sep 09	4,975	50%
Children's Medical Center & Hospital	Boston	MA	Jun 14	3,828		Sep 09	2,516	52%
CareGroup Healthcare System	Boston	MA	Jun 14	1,733		Sep 09	978	77%
Dana-Farber Cancer Institute	Boston	MA	Jun 14	1,306		Sep 09	836	56%
Boston Medical Center	Boston	MA	Jun 14	1,166		Sep 09	1,026	14%
UMass Memorial HealthCare	Worchester	MA	Jun 14	914		Sep 09	545	68%
Lahey Clinic Medical Center	Burlington	MA	Jun 14	727		Sep 09	357	104%
Baystate Medical Center	Springfield	MA	Jun 14	711		Sep 09	361	97%
SouthCoast Health System	New Medford	MA	Jun 14	696		Sep 09	485	44%
Cape Cod Healthcare	Hyannis	MA	Jun 14	526		Sep 09	288	83%
Covenant Health Systems	Lexington	MA	Jun 14	446		Dec 08	242	84%
Total all 11				19,516			12,609	55%

As you can see from the above chart, the Total Net Assets (Financial Strength) of these 11 Massachusetts Non-Profit Hospital Organizations increased by a robust 55% to a massive $19.516 bil so far during the Obama Administration.

The salient story here is that in just the past 12 months, the Total Net Assets increase during the Obama Administration of these 11 Massachusetts Non-Profit Hospital Organizations grew substantially from 28% to 55%.

Very positively impacting this very robust increase in the Net Assets (Financial Strength) of these 11 Massachusetts Hospital Organizations were actions taken by both the Obama Administration and the US Fed to strengthen the US Financial Foundation which was severely damaged from the financial meltdown in late 2008.

In addition, the Affordable Care Act (ACA) has also played a key role in this impressive increase in Net Assets (Financial Strength) of these 11 Massachusetts Non-Profit Hospital Organizations.

A remarkable thing is that these robust increases in Net Assets (Financial Strength) of these Non-Profit Hospital Organizations occurred when these Non-Profit Hospitals, particularly the Massachusetts Hospitals, were also playing very instrumental roles in the substantial annual percentage growth reduction of Total US Health Care Costs which occurred in each of the most recent three years under the ACA.

With such very solid Net Asset percentage increases of these 11 Massachusetts Hospitals, a key beneficiary of this has been and will continue to be Massachusetts citizens electing to buy health insurance on the Health Insurance Exchange.  This very robust Net Asset growth gives these Massachusetts Hospitals the financial flexibility to moderate their pricing for hospital 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.


Also from a review of audited annual financial statements shown at Electronic Municipal Market Access (EMMA), I found 11 Massachusetts Non-Profit Hospital Organizations with Net Assets above $400 mil each and which have audited financial statements in each of the most recent 4 fiscal years.

These 11 Massachusetts Non-Profit Hospital Organizations generated Total Bottom Line Net Income of a modest 6.3% of Total Operating Revenues in 2013 and an even more modest 4.9% in 2012.

Ten of the 11 Massachusetts Non-Profit Hospital Organizations posted a Bottom Line Profit Margin of below 6.0% each in 2013.

It should be pointed out that these are modest Bottom Line Profits of these largest, financially strongest Massachusetts 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 point, by far the largest of these Massachusetts Hospital Organizations is the very prestigious Partners HealthCare System, which had Total Investment Returns of $195 mil in 2013 included in Non-Operating Income, which was higher than its Total Operating Income of $158 mil also in 2013.

And to further illustrate this point, Boston-based Children's Medical Center posted Total Investment Returns of $324 mil in 2013 included in Non-Operating Income, which was more than triple the Total Operating Income of $84 mil also in 2013.

Partners HealthCare System's 2013 Bottom Line Net Income included a $254 mil economic gain from new affiliations.

Below are the Bottom Line Net Income and Total Operating Revenues for each of these 11 Massachusetts Non-Profit Hospital Organizations 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
Massachusetts Hospital Organ	City HQs	End	Income	Revenues	Margin		Income	Revenues	Margin
			mil $s	mil $s	%		mil $s	mil $s	%
Non-Profit Hospitals
Children's Med Ctr&Hospital	Boston	Sep 13	382	1,790	21.3%		229	1,769	12.9%
Lahey Clinic Medical Center	Burlington	Sep 13	62	1,047	5.9%		55	1,036	5.3%
Partners Healthcare System	Boston	Sep 13	600	10,346	5.8%		352	8,981	3.9%
CareGroup Healthcare System	Boston	Sep 13	137	2,462	5.6%		144	2,390	6.0%
Cape Cod Healthcare	Hyannis	Sep 13	37	674	5.5%		53	680	7.8%
Dana-Farber Cancer Institute	Boston	Sep 13	56	1,034	5.4%		23	987	2.3%
Covenant Health Systems	Lexington	Dec 13	30	581	5.2%		27	585	4.6%
Baystate Medical Center	Springfield	Sep 13	71	1,716	4.1%		93	1,634	5.7%
UMass Memorial HealthCare	Worchester	Sep 13	75	2,186	3.4%		54	2,228	2.4%
Boston Medical Center	Boston	Sep 13	20	1,012	2.0%		9	975	0.9%
SouthCoast Health System	New Medford	Sep 13	12	834	1.4%		35	790	4.4%
Total all 11			1,482	23,682	6.3%		1,074	22,055	4.9%

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, Massachusetts clearly is one State whose large Non-Profit Hospital Organizations are not being greedy in generating high profits.

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