Whenever I see examples of reported price gouging in sensitive industries like Healthcare, I try & pull up the financials of the companies. Two of the biggest o

Whenever I see examples of reported price gouging in sensitive industries like Healthcare, I try & pull up the financials of the companies. Two of the biggest owners of these hospitals are Hospital Corp. of America (Ticker= HCA) & Community Health Systems (Ticker=CHY) (1) The return on assets (ROA) for HCA is 6.9%: https://ycharts.com/companies/HCA/return_on_assets https://ycharts.com/companies/HCA/return_on_assets The Return on Assets for CYH is ~1.9%: https://ycharts.com/companies/CYH/return_on_assets https://ycharts.com/companies/CYH/return_on_assets This is compared to Google (11.9%), P&G (6.5%) & Walmart (7.9%) For those not familiar with ROA, it is taken as Net Income/ Total Assets. This should give you a rough idea on the return one gets on the assets / capital deployed. The higher the ROA, the better the earning power. So, in the case of HCA/CYH, if they are price gouging so much, why aren't they generating far superior returns? ---- Updated: Some people in the comments are suggesting that they are only price gouging the un-insured population. But Return on Assets (ROA) metrics are across the population base. So: if we reduce the price gouging for the un-insured through regulation, then one of two things a) the return on assets (ROA) go down to uneconomical levels & hospitals go bankrupt (2) - See examples b) Costs for insured population (e.g. Medicare etc...) goes up to meet return on capital requirements. What is the tradeoff one needs to make? --- (1)Officials at Community Health Systems of Franklin, Tenn., which operates 25 of the hospitals, and Hospital Corp. of America, based in Nashville, which operates 14, said hospital charges rarely reflect what consumers actually pay. http://www.washingtonpost.com/national/health-science/why-some-hospitals-can-get-away-with-price-gouging-patients-study-finds/2015/06/08/b7f5118c-0aeb-11e5-9e39-0db921c47b93_story.html http://www.washingtonpost.com/national/health-science/why-so... (2) http://www.beckershospitalreview.com/hospital-management-administration/20-hospital-closures-bankruptcies-so-far-in-2014.html http://www.beckershospitalreview.com/hospital-management-adm...