Saturday, March 21, 2015

US Non-Profit Hospitals On Life Support After 2008 Financial Meltdown Were Recuperated By Successful Financial Surgery Performed By Dr. Ben Bernanke

Former US Fed Chair Ben Bernanke will be delivering a key economic presentation at the University of Southern Indiana in Evansville, Indiana on March 23, 2015.  It is open to the public and free of charge.

St. Mary's Health and Deaconess Health are both in Evansville.

Indiana University Health, St. Vincent Health and Community Health Network are all in Indianapolis, IN which is 170 miles from Evansville.

Fransican Alliance is in Mishawaka, IN which is 320 miles from Evansville.

Baptist Healthcare System, Norton Hospital, Jewish Hospital and the University of Louisville Hospital are all in Louisville, KY which is only 120 miles from Evansville.

HCA, Vanderbilt Health, Community Health Systems, LifePoint Hospitals and Amsurg are all located in the Nashville, TN Metro area which is only 150 miles from Evansville.

The massive Ascension Health, BJC Healthcare, Mercy Health and SSM Health Care are all in the St. Louis, MO Metro area which is only 170 miles from Evansville.

Mercy Health ..... formerly, Catholic Health Partners ..... is in Cincinnati which is only 220 miles from Evansville.

Hospital Sisters Health System is in Springfield, IL which is 230 miles from Evansville.

Advocate Health Care Network, Northwestern Memorial Health System, NorthShore University Health System, Rush University Medical System, Cadence Health and University Chicago Medical Center are all in Chicago which is 290 miles from Evansville.

HealthSouth and the UAB Health System are both in Birmingham, AL which is 340 miles from Evansville.

The huge Trinity Health is in Livonia, MI which is 460 miles from Evansville.

The renown Cleveland Clinic is 470 miles from Evansville.

And the even more renown Mayo Clinic is 620 miles from Evansville.

Thus, as a backdrop for this upcoming Bernanke speech and continuing a much deserved tribute to Bernanke's key role in helping the US avoid a Deep, Prolonged Financial Depression, I think it would be helpful to update just what has been going on with Non-profit Hospital Organization's Financial Strength and Bottom Line Earnings (Losses) both right after the 2008 US financial meltdown and presently. 

When you visualize a hospital, all you see are very expansive land, huge buildings and tons of hospital equipment.

Thus when you review a balance sheet of a hospital, you expect to see these real estate and equipment investments comprising the overwhelming portion of total hospital assets.

But this couldn't be further from the truth.

By far the dominating assets of non-profit hospital organizations are investments in equity and debt securities.  These soft assets have accumulated over decades and decades and result from untaxed profits of non-profit hospitals being stacked up as investments on the hospital balance sheet.

And when the stock market has a good run, these investments grow in amount like weeds.

So before the US financial meltdown hit in late 2008, non-profit hospital organizations had strong balance sheets with tons of investments in stocks and bonds.

Then the 2008 financial meltdown hit and non-profit hospital organizations really took it in the chin financially.  They had to mark down their massive investments in stocks, bonds and derivatives precipitously.  As a result, their previously pristine financial strength measure of Total Net Assets ..... the excess of their Total Assets over their Total Liabilities ..... was flat-out leveled.

And it wasn't just the massive amounts of investments in common stocks and bonds which were on the books of these non-profit hospital organizations.  In addition, there were  massive amounts of investments in common stocks and bonds that were off books, in footnotes.  These would be the huge amount of investments in pension trusts of non-profit hospital organizations.

Further, when you review the type of investments in bonds and other debt instruments, you can see there were so many that were investments in US Government Sponsored Enterprises Fannie Mae and Freddie Mac.  Also, there were many investments in residential mortgages backed by Fannie Mae and Freddie Mac.

When you go back to the financial meltdown in 2008, not only did the stock market end up crashing, but also so many financial institutions were about to go belly up.

And because of their massive losses, mostly driven by both Credit Losses and Derivative Losses, both Fannie Mae and Freddie Mac were bankrupt, with losses so large and expected to continue for many years.

Thus so many non-profit hospital organizations were also in serious financial jeopardy.  Not only did their investments in common stocks crash, but they had massive investments in debt instruments linked to Fannie Mae and Freddie Mac, two flat out bankrupt entities.

And they also had massive investments in US corporate debt, where the corporations had huge amounts of investments linked to Fannie Mae and Freddie Mac.

And much of these hospital investments in US corporate debt were with corporations whose earnings had collapsed with the deep recession.

Also, with the deep, lengthy recession, hospital bad debts from patient accounts receivable were continually going through the roof.  And so were hospital charity care costs, which were also continually and dramatically increasing due to the deep, lengthy recession.

Suffice it to say that many Non-Profit Hospitals were in serious financial jeopardy in late 2008 and early 2009, before the Fed, led by Ben Bernanke, went into action.

By Bernanke's actions, the end result was a stock market that subsequently nearly doubled over the next three years and by much more over the next six years, a rescue of the auto industry, and a massive turn around of so many financial institutions which were clearly headed for the junk pile, including AIG, Merrill Lynch, Wachovia, Bank of America, Citigroup, and so many banks.  And also the bail out of Fannie Mae and Freddie Mac.  These very troubled financial institutions were all cleaned up by the US Federal Government with Ben Bernanke playing a very key role, with an overall result of not costing US taxpayers a dime.  

Also, non-profit hospital organizations are highly leveraged with tons of debt.  By Bernanke's action to substantially reduce both short-term and long-term interest rates, the financial pressure from huge amounts of debt was dramatically alleviated.

Let me quantify just how financially weak these non-profit hospital organizations were after the 2008 US financial meltdown and and how financially strong they are now, due primarily to both Bernanke's economic actions and the economic impact of the Affordable Care Act.

From a thorough review of EMMA, I found 67 US Non-Profit Hospital Organizations with Total Revenues above $2.5 bil in their most recently reported fiscal year.

These 67 US Non-Profit Hospital Organizations had Audited Total Bottom Losses of a massive $12 bil in their 2008 or 2009 fiscal year end which included the US 2008 Financial Meltdown.

In their most recent fiscal year reported, these same 67 US Non-Profit Hospital Organizations had Total Bottom Line Earnings, predominately Audited Amounts, of a massive $29 bil.

Yeah, that's an incredible $41 bil of annual earnings improvement from what happened in the US Financial Meltdown year.

Do you think these Non-Profit Hospital Organizations might like Ben Bernanke?  But do you think they have showed him any gratitude for what he did for them?

Below here are the Earnings (Losses) and Total Revenues for each of these 67 US Non-Profit Hospital Organizations.





Most Most US

Recent Recent Financial

Fiscal Fiscal Meltdown

Most Year Year Bottom Annual

Recent End Bottom Line Bottom

Fiscal Total Line Net Line

Year Operating Net Income Profit
US Big Non-Profit Hospitals HQs State End Revenues Income (Loss) Improvement

mil $s mil $s mil $s mil $s

Kaiser Permanente Oakland CA Dec 14            56,433              3,070               (794)              3,864
Ascension Health Edmundson MO Jun 14            20,150              2,056               (717)              2,773
Catholic Health Initiatives Inverness CO Jun 14            13,889                 634               (467)              1,101
Trinity Health Livonia MI Jun 14            13,586                 951               (489)              1,440
UPMC Pittsburgh PA Jun 14            11,416                 568                 184                 384
Providence Health Renton WA Dec 13            11,137                 253               (157)                 410
Partners Healthcare System Boston MA Sep 14            10,906                 120                   46                   74
Dignity Health San Francisco CA Jun 14            10,677                 913               (126)              1,039
Mayo Clinic Rochester MN Dec 14              9,761              1,128            (1,235)              2,363
Sutter Health Sacramento CA Dec 13              9,649                 358                 319                   39
Adventist Health System Altamonte Springs FL Dec 14              8,383                 612                 233                 379
North Shore Long Island Jewish Health Great Neck NY  Dec 13               7,002                 252               (120)                 372
Cleveland Clinic Health System Cleveland OH Dec 14              6,706                 704               (416)              1,120
St Joseph Health System Orange CA Jun 14              5,632                 309               (125)                 434
Banner Health Phoenix AZ Dec 14              5,398                 258               (767)              1,025
Indiana University Health Indianapolis IN Dec 13              5,247                 541               (590)              1,131
Advocate HealthCare Network Oak Brook IL Dec 14              5,231                 370               (472)                 842
HealthPartners Bloomington MN Dec 13              5,223                 252                   65                 187
Johns Hopkins Health System Baltimore MD Jun 14              5,126                 357                   38                 319
Henry Ford Health System Detroit MI Dec 14              4,691                   39                     8                   31
MedStar Health Columbia MD Jun 14              4,628                 305                 (55)                 360
IHC Health Services Salt Lake City UT Dec 14              4,620                 628               (236)                 864
New York and Presbyterian Hospital New York NY Dec 14              4,577                 296                   12                 284
Mercy Health Chesterfield MO Jun 14              4,439                 136               (100)                 236
Sentara HealthCare Norfolk VA  Dec 13               4,299                 612               (158)                 770
Aurora Health Care Milwaukee WI  Dec 13               4,249                 195                   34                 161
Baylor Health System Dallas TX Jun 13              4,124                 489                   86                 403
Spectrum Health System Grand Rapids MI Jun 14              4,108                 336                 (51)                 387
BJC Healthcare St Louis MO Dec 14              4,099                 270               (691)                 961
Beaumont Health System Royal Oak MI  Dec 14               3,989                 182               (214)                 396
Geisinger Health System Danville PA Jun 14              3,978                 429                 (51)                 480
Mercy Health (Catholic Health Partners) Cincinnati OH Dec 13              3,956                 365               (548)                 913
University Penn Health System Philadelphia PA Jun 14              3,939                 439                   57                 382
Memorial Hermann Healthcare System Houston TX Jun 14              3,938                 355                 (19)                 374
Texas Health Resources Arlington TX Dec 13              3,846                 768               (402)              1,170
SSM Health Care St Louis MO Dec 13              3,815                 127               (429)                 556
Novant Health Winston-Salem NC Dec 14              3,788                 202               (270)                 472
Allina Health System Minneapolis MN Dec 14              3,604                 147               (120)                 267
Christus Health Irving TX Jun 14              3,552                 143               (266)                 409
Bon Secours Health System Baltimore MD Aug 14              3,462                 174               (125)                 299
Carolinas Health Care System Charlotte NC Dec 13              3,412                 181               (345)                 526
Yale-New Haven Health Services New Haven CT Sep 14              3,395                 204                   53                 151
Fairview Health Services Minneapolis MN Dec 13              3,370                 249               (114)                 363
Montefiore Medical Center New York NY Dec 13              3,346                 182                 (84)                 266
Sanford Health Sioux Falls SD Jun 14              3,291                 118                 (30)                 148
Catholic Health East Newtown Square PA Dec 13              3,269                 194               (542)                 736
Adventist Health West Roseville CA Dec 13              3,052                   55                   31                   24
Jefferson Health System Radnor PA Jun 13              3,047                 304                   59                 245
University Maryland Medical System Baltimore MD Jun 14              3,027                 226                 (55)                 281
Memorial Sloan-Kettering Cancer Center New York NY  Dec 13               3,025                 503               (567)              1,070
Stanford Hospital & Clinics Stanford CA Aug 14              2,998                 432                 (96)                 528
Barnabas Health West Orange NJ  Dec 14               2,967                 330               (315)                 645
Cedars-Sinai Medical Center West Hollywood CA Jun 14              2,932                 439                   75                 364
Sharp HealthCare San Diego CA Sep 14              2,929                 315                   69                 246
McLaren Health Care Flint MI Sep 14              2,903                 234                   69                 165
UnityPoint Health Des Moines IA Dec 13              2,841                 262                 (45)                 307
St Vincent Health Indianapolis IN Jun 14              2,788                 582                 (45)                 627
OhioHealth Columbus OH Jun 14              2,768                 675               (165)                 840
CareGroup Healthcare System Boston MA Sep 14              2,740                 161                   49                 112
Inova Health System Falls Church VA  Dec 14               2,699                 331               (189)                 520
The Methodist Hospital System Houston TX Dec 13              2,616                 684               (232)                 916
Franciscan Alliance Mishawaka IN Dec 13              2,609                 245               (361)                 606
Duke University Health System Durham NC Jun 14              2,600                 483                 173                 310
BayCare Health System Clearwater FL Dec 13              2,568                 632               (327)                 959
Scripps Health San Diego CA Sep 14              2,565                 294                 126                 168
Texas Children's Hospital Houston TX Sep 14              2,559                 219                 166                   53
Presbyterian Healthcare Services Albuquerque NM  Dec 14               2,559                 195               (261)                 456

Total all 67

         386,128            29,072          (12,031)            41,103