A new analysis of hospital finances offers fresh fodder in the debate over the role that hospital consolidation and prices play in the growth of U.S. healthcare costs.
The unexpected conclusion was that seven of the 10 hospitals in the U.S. with the biggest surpluses from patient-care services in 2013—which were described in the study as the most profitable facilities—were not-for-profits.
Gerard Anderson, director of the Center for Hospital Finance and Management at the John Hopkins Bloomberg School of Public Health, and co-author Ge Bai, a professor at Washington and Lee University in Lexington, Va., based their analysis on Medicare cost reports. The results were published last week in the journal Health Affairs.
Anderson and Bai found that factors influencing surpluses include a hospital's market power, whether the hospital's market has a dominant insurer, retail price markup, prestige, teaching status, the mix of uninsured and Medicare patients, and for-profit or not-for profit ownership.
“Profits are going to be high when a hospital has a very dominant market share,” Anderson said. “The Federal Trade Commission needs to take a look at whether there is unfair competition.”
Anderson said this is the first study he's aware of that looks at patient-care services separately from overall margins. He emphasized that the study, based on data from about 3,000 acute-care hospitals, is a snapshot of one year's financial performance and does not capture prior or subsequent performance.
Gundersen Lutheran Medical Center in La Crosse, Wis., Sutter Medical Center in Sacramento, Calif., and Stanford Hospital in Palo Alto, Calif., topped the list, which included three HCA-owned facilities in Dallas, Englewood, Colo., and San Antonio.
But officials at Gundersen and Sutter challenged the study's methodology, arguing Medicare cost reports of a single hospital in a larger system.