Forbes: Most profitable hospitals have 25% operating margin

A survey of hospital finances by Forbes found that "some American hospitals make 25 cents or more for every $1 in patient revenue they take in," Forbes reports.

The list, "done by the American Hospital Directory, is based on operating income figures that hospitals must report to the federal Medicare program each year. It found that 24 hospitals in the country with over 200 beds make an operating margin of 25% or more. That kind of profit margin compares favorably to drug giants like Pfizer, who are often vilified for charging too much for their drugs. It easily beats the operating profit margin that General Electric reported last year." Fifteen of the 25 most profitable hospitals "were part of for-profit chains. HCA had 10 other hospitals in the top 25, including Medical City Hospital in Dallas, with a 26% operating margin; it is expected to do an initial public offering soon. But some big nonprofits also made the list, including both of Mayo Clinic's main hospitals and Ohio State University's hospital. Some say profitable hospitals may be using local monopoly to overcharge insurers and patients. Others see the high profits simply as sign of efficiency and good quality" (Whelan, 8/31).

Tampa Bay Business Journal: "The most profitable hospital in the country [on the Forbes list] was 235-bed Flowers Medical Center in Dothan, Ala., with a 53 percent operating margin. It is part of the Community Health Systems Inc. (NYSE: CYH) chain in Brentwood, Tenn." (8/31).

Denver Business Journal: "Two Denver-area Colorado hospitals are on Forbes' first-ever list of the nation's 25 most profitable hospitals. Swedish Medical Center in Englewood is No. 6 on the list, with a 33 percent operating margin and $447 million in net patient revenue, Forbes says. And the Medical Center of Aurora is No. 22, with a 26 percent operating margin and $336 million in net patient revenue" (8/31).

Meanwhile, "Memorial Hospital at Gulfport laid off 47 employees Friday as part of cost-cutting measures to offset an $11 million budget shortfall, hospital administrators said Tuesday," the Biloxi, Miss., Sun Herald reports (Magandy, 8/31).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.