While hospitals complain of slim margins, they’re making billions on Wall Street

Large nonprofit hospitals and health systems say they’re operating on slim profit margins for patient care because Medicare and Medicaid don’t pay for the total cost of care, but an analysis by Axios reporter Bob Herman found they’re reaping big profits when factoring in Wall Street investments.

Looking at annual financial reports of 84 of the biggest nonprofit hospitals, Herman found their profits jumped from $14.4 billion (for an operating profit margin of 2.7 percent) to $35.7 billion (a 6.7 percent margin) when accounting for investments, stocks, bonds, credit default swaps and gains from mergers and acquisitions.

“We don't have anything close to what most people would see as a functioning, competitive market in hospital care,” Alan Sager, a health policy professor at Boston University who reviewed the analysis, told Axios. “Hospitals may do well because they got dominant or because they were lucky in some of their investments.”

The American Hospital Association responded by saying hospitals reinvest those Wall Street profits—which they credited to a strong stock market in 2017—in processes which benefit patients. They also faulted CMS for “increased regulatory burden” and for paying “less than the cost of care.”

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