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Hospital Finances Look Pretty Good

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The hospitals have weighed in on the debate to expand Medicaid to an additional 400,000 people here in Virginia. They have said they need this expansion to help them because of a federal entitlement system that loses them money. Even though the Governor and backed off wide expansion by Executive Order, this issue could easily come up again in January when the General Assembly convenes.

We need to better understand the hospitals’ financial situation and we need a more open discussion about why they are actively advocating this move that could seriously harm our state’s finances and put a further burden on an already flawed Medicaid system.

We all rely on hospitals and we want them to be really good when we need them for ourselves, our loved ones and our friends. So we all have a “connection” to our hospitals. So understanding why they support Medicaid expansion is important, especially since they have crafted that support by saying they need it for their financial health.

The hospitals supported Obamacare with this “deal” as I understand it: they agreed to cuts in Medicare reimbursements with the promise that Medicaid would be expanded across the board. But the Supreme Court tossed the Medicaid expansion out and left it to the states to decide. This left the hospitals with cuts in Medicare and nothing in return. So in this one area of the hospitals’ activity – helping those without insurance — they are likely to be losing money.

So now the hospitals want an expanded Medicaid system to bring in more dollars to replace those that are lost from their agreed-to reduction in Medicare reimbursements. Instead of going to the Administration and Congress asking for the “old system” to be re-established, the hospitals are looking for a significant expansion of Medicaid here in Virginia.

But a recent study by the Thomas Jefferson Institute indicates that the hospitals’ finances are in pretty good shape overall, although some, especially in the southwestern part of our state, are hurting (here). This study relies on the numbers reported on the Virginia Hospital Information website ( for 2012, the latest available figures. This Jefferson Institute report lists the profit/loss and net worth of these hospitals.

Hospitals overall in our state had a combined profit of over $1.5 billion and almost $15 billion in net worth. This would indicate that hospitals have substantial profits in other areas that more than off-set the losses that they incur treating those you cannot pay.

This new Jefferson Institute report shows hospitals categorized by five regions in the state, by non-profit and private hospitals, and by type of hospital. Some are “in the red” but most are not.

Clearly, at least as the latest financial figures show, the hospitals may “want” to have more Medicaid dollars roll in, but do they really “need” those taxpayers’ funds? The figures in this new report certainly question the hospitals’ call for financial help.

Some say that hospitals are faced with increasing costs due to Obamacare, that they need to keep their technology and equipment up-to-date, and that strong finances allow those who rely on selling bonds to get better percentages than they would otherwise. However, many if not most businesses in our state and country are faced with incredible new federal regulations and Obamacare taxes. Like hospitals, businesses need to keep their technology and equipment up-to-date. Their financial strength is critical to their ability to borrow at good rates and keep a solid value for the company. So it seems hospitals are basically in the same position as most other businesses. And even though hospitals must assist all who walk into their Emergency Rooms, whether these folks can pay or not, they are, in general, in good financial shape as the numbers reported on the Virginia Hospital Information website show.

Of course, the difference is that the hospitals want the taxpayers to help them out by substantially increasing one of the three federal entitlement programs that are creating such a long term financial anchor on our country’s economic future.

If the hospitals have a serious financial problem due to the deal they made in support of Obamacare, they might want to join forces with those seeking a completely new system and get back to where they were before they made a political deal that the Supreme Court nullified.

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