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7 of 10 Most Profitable Hospitals Are NFPs

By John Commins  
   May 04, 2016

According to the study, the 10 U.S. hospitals with the highest profit from patient care services are:

  1. Gunderson Lutheran Medical Center, Nonprofit (La Crosse, WI) Profit: $302.5 million
  2. Sutter Medical Center, Nonprofit (Sacramento, CA) Profit: $271.9 million
  3. Stanford Hospital and Clinics, Nonprofit (Palo Alto, CA) Profit: $224.7 million
  4. Norton Hospital, Nonprofit (Louisville, KY) Profit: $211.2 million
  5. Medical City Dallas Hospital, For profit (Dallas, TX) Profit: $210.3 million
  6. Swedish Medical Center, For profit (Englewood, CO) $192.5 million
  7. Hospital of the University of Pennsylvania, Nonprofit (Philadelphia, PA) Profit: $184.5 million
  8. Methodist Hospital, For profit (San Antonio, TX) Profit: $172.4 million
  9. Sacred Heart Medical Center, Riverbend, Nonprofit (Springfield, OR) Profit: $171.2 million
  10. Carle Foundation Hospital, Nonprofit (Urbana, IL) Profit: $163.5 million

Anderson says the communities served by these high-profit hospitals should re-examine their relationships because these communities are footing the bill for higher healthcare costs but they're not collecting taxes on it.

"A lot of the communities where these hospitals are located are having financial difficulties," he says. "The hospitals, which are making money, aren't contributing to the financial reserves of that community. They are obviously employing people, but they are earning substantial profits and not paying any of those profits to the communities."

While the majority of the hospitals were collecting revenues on a fee-for-service model in 2013, Anderson says it's not clear if they can continue to reap handsome profits when the fee structure moves into value-based purchasing.

"That is one of the reasons why we did this study," he says. "We wanted to provide a baseline as to what are the hospitals doing well before value-based purchasing comes on, and then seeing if the same hospitals are able to respond to the new environment. In the old environment, the more you did the more you got paid. In the new environment, the better quality you provide the more you are going to get paid. It is a fundamental shift in payment and the question is will the same hospitals prevail."

Other hospitals on the list also complained that their profits were taken out of context.

Carle Foundation Hospital spokeswoman Jennifer Hendricks-Kaufmann says "the report considers only one year and omits important details like the system's losses, expenses and one-time government payments that occurred in 2013 and that omission makes Carle appear more profitable than the organization actually was."

"It's a significant omission and the authors admit there are factors they could not accurately address. We strive for a 2% to 3% margin, which we reinvest into patient care, including $44 million in charity care at cost to more than 27,000 people in 2013 alone. As a non-profit our community benefits, not shareholders."

Susan Phillips, Penn Medicine's senior vice president for Public Affairs, says the "excess revenue derived from clinical care at HUP is used to subsidize initiatives across the organization, including supporting and improving critical programs like a Level I trauma center and neonatal intensive care units, as well as funding biomedical research activities and education and training efforts in the Perelman School of Medicine."

PeaceHealth spokeswoman Marcy Marshall says the report "does not reflect how we reinvest the dollars back into our community."

"Our mission calls for us to reinvest our revenues back into our communities' health needs," Marshall says. "Each year consistent with the expectations that our community has for us as a nonprofit, these revenues are used to fund critical health and health improvement programs, capital investments and community benefit programs."

For example, in 2013 PeaceHealth investments totaled more than $128.3 million and included a $10 million expansion of the behavioral health services; $22 million for new diagnostic imaging and surgical technology, and $16 million to improve access to primary care and specialty care services.

John Commins is a senior editor at HealthLeaders.


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