4 ms·
It's interesting the article doesn't directly describe or explore the actual reported profit margins of the various companies! I work in the industry and in ge
by chevman 3y ago
It's interesting the article doesn't directly describe or explore the actual reported profit margins of the various companies!
I work in the industry and in general you see high margin (50-75%+) in areas like outpatient surgery centers, senior primary care ACO groups (ie providers getting paid by CMS to fully manage Medicare Advantage patients), etc.
PBMs and health plans generally have lower margins (in the 5-15% range), dictated largely by state and federal MLR regulations.
Watch who the large medical insurers are buying and you will get a good feel where there is margin to be had. They can use this to generate cash flow for other activities, drive savings within their insurance book, offer more competitive group pricing to their clients(ie employers, state govts, etc),drive affordability directly to consumers or some combo based on what business goals they need to hit that quarter.
- specialist 3y agoI worked within the Quest Diagnostics conglomerate, mid 2000s. After capex, lab companies print money. Some wags added a speedometer type thing to their monitoring dashboard to show "velocity" of revenue. (Actually proved pretty useful as a global system health indicator.)
- OrwellianChild 3y agoWorth getting a bit specific about terminology here... The article states that _insurance_ profits are capped, but that PBMs and other stages of care are not. That's why they're all vertically integrating - so they can steer margin to the un-regulated entities. Can't help but feel like this is a simple anti-trust issue just like you'd see in other industries. If they were truly separate companies with robust competition, we could see a lot more efficiency and less rent seeking.
- GiorgioG 3y agoIt's all a shell game...sure insurance profits are capped, but it doesn't stop executives from taking lavish salaries. I worked for a Blue Cross Blue Shield affiliate in 2006-2007. The CEO was making 2.1 million dollars per year. Think about that.
- mdnahas 3y agoYou don’t want to compare companies by profit margin. (Profit/Revenue) You want to compare them by return on capital. (Profit/Capital) Some businesses have a high turnover of inventory, so revenue is large even if there was very little money invested.