Seven Of Ten Most Profitable Hospitals Are Non-Profits

According to a new study, 7 of the 10 most profitable U.S. hospitals are non-profits. The researchers based their analysis on federal data from 2013 on nearly 3,000 hospitals. Profit was measured using net income from patient care services, and disregarded other income such as donations, investments, and tuition.

The study results revealed that the biggest cost to hospitals was, unsurprisingly, delivery of patient care. This segment was a money-loser for 55% of the hospitals – only about a third made some profit – but only up to $1,000 per patient. Only 12% of hospitals surveyed made profits of more than $1,000 per discharged patient.

The hospitals that were highly profitable were mostly for-profit corporations, with names including Medical City Dallas Hospital in Texas and Swedish Medical Center in Englewood, Colorado.

According to Danny Chun of the Illinois Hospital Association, nonprofits reinvest net income into "the latest technology, newer equipment, modern facilities, highly-trained staff and other programs that ensure access to quality health care services and benefit the health of their community."

In the study, hospitals that were the most lucrative were those affiliated with larger health care systems who saw less competition in their markets.

According to Craig Garthwaite of Northwestern University's Kellogg School of Management, this study along with other recent studies show hospital price variation around the country may put more public pressure on hospitals to lower the growing health care spending.

"Hospitals have gotten a bit of a free pass when we talk about health care spending," Garthwaite said.

 The study was published in the journal Health Affairs.