< 1 min read

The recent study published in Health Affairs looked at the most profitable hospitals, and found 7 were nonprofits, but the study did not address the context of those profitable nonprofits. 

"The same study did show that a majority of the 3,000 U.S. hospitals that they studied lost money…when just considering patient care services. They did not look at potential profits from other activities such as education, licensing technology, renting space, investments, parking, selling T-shirts and plush toys, and providing wonderful hospital food. Also, losing money does not mean that individuals within the hospital are not making money, since salaries can be considered costs. In Bai’s and Anderson’s study, 59% of the hospitals were nonprofit, 25% for-profit and 16% public. In a press release, Anderson indicated that 'the system is broken when nonprofit hospitals are raking in such high profits. The most profitable hospitals should either lower their prices or put those profits into other services within the community. We need to develop incentives that allow all hospitals to make a fair profit while at the same time keeping prices reasonable.' Bai added that 'some hospitals are obtaining outrageous profits.'

 "What types of hospitals tended to be more profitable? Those that were larger, located in urban areas, did not have to teach medical students, interns or residents, and were part of a larger health system. The last characteristic may be key. Hospitals with relative monopolies in a region may be in stronger positions when attracting patients and negotiating with insurers and employees. After all, if you are the only game in town, you may be able to charge higher fees and offer lower salaries and not worry about losing patients to competitors."--Bruce Y. Lee, Forbes

Leave a Reply

Your email address will not be published. Required fields are marked *