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i think one of the most interesting things about healthcare is how local it is. Most hospitals around the country are struggling, but there is a subset of large
by aaavl2821 9y ago
i think one of the most interesting things about healthcare is how local it is. Most hospitals around the country are struggling, but there is a subset of large powerful hospitals that are making money hand over fist. They are basically buying physician networks so that 1) they can charge more for the same services by getting facility fees and higher negotiated rates and 2) they can control patient flow from primary care all the way to the hospital. And often that means treating a patient in the most profitable setting to the health system
Sutter is a shining example of this type of health system -- get huge regional scale, vertically and horizontally integrate, control patient flow, and crush payers at the negotiating table. Their prize is having some very profitable hospitals, including the second most profitable in the nation (almost $300M / year in profit at one hospital). And this profit is after paying their execs handsomely
Hospital spending is the biggest driver of cost, in no small part because of practices like the above
- SkyPuncher 9y ago> Their prize is having some very profitable hospitals, including the second most profitable in the nation (almost $300M / year in profit at one hospital). Yea, but this is on over $12 billion in revenue. That's less than 2.5% margin.
- aaavl2821 9y agothe article i saw said that the $270M profit was for a single hospital, sutter memorial hospital in sacramento, which does revenue of $3B per a separate article i found. it is interesting that sutter's overall system-level profit is $370M. i think they have a few other very profitable hospitals as well. they must spend a lot on corporate sg&A and executive salaries (their CEO has a $7-10M salary IIRC) https://www.forbes.com/sites/brucelee/2016/05/08/very-profitable-nonprofit-hospitals-but-where-are-the-profits-going/#6303d5636b22 https://www.forbes.com/sites/brucelee/2016/05/08/very-profit... https://www.beckershospitalreview.com/lists/100-top-grossing-hospitals-in-america-2013.html https://www.beckershospitalreview.com/lists/100-top-grossing...
- SkyPuncher 9y agoLarge salaries for the CEO aren't really that surprising. For a non-profit like a hospital, they base CEO salary on comparables in the industry.
- aaavl2821 9y agoI think sutters CEO is in the top 3 or so highest paid non profit CEOs, and sutter may be the biggest / second biggest non profit health system in the country, so I don't know that there are many industry comparables I'd love to see a breakout of corporate g&a vs provider level g&a at sutter vs a set of comparable systems. All that "non-profit" profit has to go somewhere
- Spooky23 9y agoOh totally. These networks engage in all sorts of unethical and self-dealing practices as well. The Catholic hospital and medical network in my region was swallowed up with Trinity Health, which is a national medical network. Your interaction with a doctor or hospital is entering a sales funnel, where each additional interaction is engineered to generate more revenue for the network. A family member had a stroke, which was debilitating and had a bunch of after affects. Prior to hospital discharge, the social worker (aka salesperson) drops a packet of nursing homes in the room and demands that it gets filled out by the end of that day. (which is illegal) That packet doesn't include acute rehab facilities, which is contrary to their physician's guidance. The list is sorted by available beds and exclusively consists of nursing homes owned by the medical network.
- aaavl2821 9y ago"Population health" at work! That is terrible about your family member though. Its a horrible system