On Forbes.com, David Whelan directs our attention to the magazine’s listing of the nation’s 25 most profitable hospitals with the irresistible tease that “some American hospitals make 25 cents or more for every $1 in patient revenue they take in.”
Our list, done by the American Hospital Directory, is based on operating income figures that hospitals must report to the federal Medicare program each year. It found that 24 hospitals in the country with over 200 beds make an operating margin of 25% or more.
In fact, we learn later, one Alabama hospital – the national profit leader – enjoyed 53 percent operating margins, though it now disputes those numbers and says it somehow overstated its revenue by $180 million. Of the top 25 on the list, 15 are for-profit hospitals. Of those, 10 belong to the Hospital Corporation of America chain. The dominance of consolidators like HCA likely has quite a bit to do with rising costs.
Hospital charges represent about a third of total health care spending – $718 billion altogether. It’s more than what’s spent on doctors, drugs, nursing homes or any other category-type of care. Hospitals have been quietly consolidating in recent years. Now many hospital “systems” dominate their regional markets, often allowing them to dictate prices to insurers who pay the bill.
Whelan also looks at the possible connection between profitability and quality of care, though there don’t seem to be any hard and fast numbers.