Seven of the 10 most profitable hospitals in the United States in 2013 – each earning more than $163 million in profits from patient care services – were nonprofit hospitals, according to new research from the Johns Hopkins Bloomberg School of Public Health and Washington and Lee University.
The findings, reported in the May issue of the journal Health Affairs, show that while the majority of U.S. hospitals lost money caring for patients, a small percentage earned large profits. The results raise questions about whether peculiarities in the payment systems or some other factors are creating these outsized winners.
In the fiscal year ending Sept. 30, 2013, for example, the 239-bed nonprofit Gundersen Lutheran Medical Center in La Crosse, Wisconsin, was the most profitable hospital in the U.S., earning a profit of $302.5 million, or $4,241 per patient.
“A small subset of nonprofit hospitals are earning substantial profits,” says study leader Dr. Gerard F. Anderson, a professor in the Department of Health Policy and Management at the Bloomberg School. “Either they’re doing something right or they are taking advantage of a flawed payment system. Perhaps the most important question is what are they doing with all of that money?”
Anderson, who authored the study with Dr. Ge Bai, an assistant accounting professor at Washington and Lee University, believes that the most profitable hospitals have monopolies, or near monopolies, in their communities. This allows these hospitals to charge very high rates to private insurers, which are in a bind because they must have these hospitals in their networks in order to attract customers.