Pretty much any hospital executive will tell you it’s a thin-margin business.
But a new report out in the journal Health Affairs finds that there are hospitals out there making fat margins, worth hundreds of millions of dollars.
Seven of the top 10 most profitable hospitals in 2013 were nonprofits, including one in Wisconsin with more than $300 million, according to the study.
Johns Hopkins economist Gerard Anderson said these hospitals tend to spend their money in several ways.
“The most common thing they do is buy more hospitals. They also might use it for buildings or new equipment, and finally some of them just accumulate it and have very large endowment,” he said.
Anderson said when it comes to coveted tax-exempt nonprofit status, the question is whether hospitals should be allowed to amass that kind of money.
The American Hospital Association’s legal counsel Melinda Hatton said there’s no link between profitability and tax status.
“The initial test for tax-exempt status is really about access. The doors need to be open to everybody in the community with the care that they need,” she said.
Hatton said the nonprofits are investing in their institutions, which is in line with their responsibilities.
Critics worry those investments end up shutting some patients out.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.