Skip to main content
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Digital Health
    • Transformation
    • ESG
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • Newsletters
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Providers
May 07, 2016 01:00 AM

Not-for-profits top list of most profitable hospitals

Harris Meyer
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    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.

    Top five most profitable hospitals

    MH Takeaways

    Some of the systems topping the list argue that it's wrong to calculate surpluses from the Medicare cost reports of a single hospital in a larger system.

    “It's misleading and of limited value to look at the stand-alone portion of the hospital,” said Dara Bartels, chief financial officer at Gundersen, an integrated delivery system that also operates four critical-access facilities, a number of clinics, a health plan and other entities. “It's different from if you look across our entire system.”

    Bill Gleeson, a spokesman for Sutter Health, which has faced heavy criticism from payers for its prices, said that the system had a combined margin of 2.6% in 2015, and that it reinvested all those earnings into services for its communities. “Analyzing Medicare cost reports of a single care center within an integrated … healthcare network isn't a constructive or relevant exercise,” he said.

    According to the Health Affairs study, 45% of hospitals had a positive margin for patient-care services. The median for-profit facility showed a positive margin, while the median not-for-profit and public facility showed a loss.

    But even many hospitals that showed losses on patient care had positive margins overall. Median net income per adjusted discharge from all activities—including investments, charitable contributions and space rental—was $353 for all hospitals and $178 for hospitals with 50 or fewer beds.

    While not-for-profits dominated Anderson and Bai's top 10 in terms of total surplus for patient-care services, for-profit hospitals generally had higher surpluses per adjusted discharge.

    “Investor-owned hospitals tend to have substantially higher charges than not-for-profit or government hospitals, and they tend to have lower costs,” said Anderson, who noted that for-profits tend to be smaller than not-for-profits and therefore have smaller total surpluses. “It is not surprising that for-profit hospitals maximize profits. What was surprising is that some nonprofits had high overall profits.”

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    WelbeHealth Pace Center
    PACE gains speed as states seek nursing home alternative
    Oak Street Health
    Oak Street Health to expand into Arkansas, Iowa, Kansas, Virginia
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Modern Healthcare A.M. Newsletter: Sign up to receive a comprehensive weekday morning newsletter designed for busy healthcare executives who need the latest and most important healthcare news and analysis.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Digital Health
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • Newsletters
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Jobs
      • People on the Move
      • Reprints & Licensing