High-profit hospitals

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The average American hospital barely breaks even. But some are enormous profit centers. Forbes’ first-ever survey of America’s most profitable hospitals reveals that some American hospitals make 25 cents or more for every $1 in patient revenue they take in.

Our list, done by the American Hospital Directory, is based on operating income figures that hospitals must report to the federal Medicare program each year. It found that 24 hospitals in the country with over 200 beds make an operating margin of 25% or more. That kind of profit margin compares favorably to drug giants like Pfizer, who are often vilified for charging too much for their drugs. It easily beats the operating profit margin that General Electric reported last year.

The most profitable hospital in the country, 235-bed Flowers Medical Center in Dothan, Ala., recorded an incredible 53% operating margin. It is part of the big for-profit Community Health Systems chain in Brentwood, Tenn. Del Sol Medical Center in El Paso snared second place with an astronomical 45% operating margin. It’s part of the big HCA chain, based in Nashville. Neither hospital returned calls asking for comment.

Not surprisingly, a disproportionate 15 of 25 hospitals on our list were part of for-profit chains. HCA had 10 other hospitals in the top 25, including Medical City Hospital in Dallas, with a 26% operating margin; it is expected to do an initial public offering soon. But some big nonprofits also made the list, including both of Mayo Clinic’s main hospitals and Ohio State University’s hospital.

For an in-depth look at America’s Most Profitable Hospitals, click here.
Some say profitable hospitals may be using local monopoly to overcharge insurers and patients. Others see the high profits simply as sign of efficiency and good quality.

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