Health Care Profits For Me, But Not For Thee

Companies and lobbying groups often paint their business foes as the primary problems with the health care system……………..

1 big thing: Health care profits for me, but not for thee

SOURCE: www.axios.coM

In July, the head of the American Hospital Association blasted UnitedHealth Group for its “jaw-dropping” profits in the second quarter.

But Axios’ Bob Herman dug into the financial records of several large, not-for-profit hospital systems, and found three times more profit than what UnitedHealth pulled down.

Reality check: Companies and lobbying groups often paint their business foes as the primary problems with the health care system, but each sector contributes to the system’s dysfunction.

By the numbers: UnitedHealth Group, which also increasingly owns doctors and other services, posted a net profit of $4.3 billion on $71.3 billion of revenue in the second quarter.

  • UnitedHealth’s operating profit, which excludes taxes and interest, totaled $6 billion.
  • Axios looked at the Q2 financial data for 24 major tax-exempt hospital systems that combined for roughly $72 billion of revenue, on par with UnitedHealth.

Those 24 systems combined for a net profit of $11.9 billion, or nearly three times UnitedHealth’s net profit in the quarter.

  • The hospitals’ operating profit, which excludes investment income, was $3.6 billion, or about 60% of UnitedHealth’s operating profit.
  • Hospitals often point to their operating incomes when referring to slim margins without taking into account the benefits from their investments.
  • The American Hospital Association didn’t make anyone available for an interview, but sent a statement that said, “Comparing one commercial insurer to one hospital or health system doesn’t give Axios the story you want to publish, so instead you’re comparing one insurer to 24 health systems comprised of hundreds of hospitals that provide care 24/7.”
  • The analysis looked at a group of systems, instead of just one system, to provide a better average of how large systems were doing. Individually, some hospital systems like Mayo Clinic (31% net margin) and Indiana University Health (28% net margin) are significantly more profitable than UnitedHealth (6% net margin).

The bottom line: Health care has been as profitable as ever during the pandemic. That has been true for both hospitals and health insurers.