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That would imply hospitals are a very profitable business. However, only 18% of hospitals are for profit in the first place, and nearly a hundred hospitals (mos

That would imply hospitals are a very profitable business. However, only 18% of hospitals are for profit in the first place, and nearly a hundred hospitals (mostly rural) have closed in the last year. The operating margin of NFP hospitals in 2017 was 1.7%. The average operating margin of the S&P 500 was 10.7%. And id bet insurance companies are looking better than hospitals as well. Plus hospitals cant just charge for procedures at cost. There are revenue sinks hospitals have no choice to deal with. If someone without insurance and no source of income gets hurt and has to go the ICU, it can cost upwards of 10k a day. Who pays the bill? The hospital. And they cant discharge such a patient until they're healthy.

aaavl2821 7y ago
The dynamics between hospitals and payers depend on market and negotiating leverage. A small hospital in a competitive market will struggle, while a large hospital system in an unsaturated market will do very well. Are hospital failures due to payers, or due to competition from other hospitals? If a payer is getting squeezed by a big hospital system, it may in turn squeeze a smaller hospital or provider. One of the biggest for profit hospital chains, HCA, generates 20-25% EBITDA margins. Many non profits are very powerful and make lots of money, they just spend more on salaries so their net income is lower. But yes many hospitals do struggle. Insurance companies must spend 80% of their premium revenue on healthcare services. So their profits are in effect capped.