By Dutch Rojas
Health systems love to say their margins are razor-thin. But when they do, they’re only talking about operating margins—the money they make (or lose) from patient care alone. What they don’t include tells a very different story.
Large nonprofit systems sit on massive portfolios, generating millions in returns. Some look more like hedge funds with ERs attached.
Programs like 340B, Disproportionate Share Hospital (DSH) payments, and other federal/state aid pour billions into health systems. But they don’t count that when discussing margins.
Many systems own medical office buildings, lease space to physicians, and run profitable partnerships with outpatient centers. This revenue? Not in the margin calculation.
Some systems operate their own health plans, capturing premiums and controlling reimbursement rates—yet they still claim financial distress.
Large nonprofit health systems raise millions in donations, further padding their balance sheets.
And let’s not forget cross-subsidization, health systems jack up commercial rates to make up for what they call “losses” on Medicare and Medicaid.
Next time a health system cries poverty, ask them: Are you including all your income, or just the part that makes you look like a victim?
