Hospital Profits Rise 9 Percent

This week’s Quarterly Services Survey (QSS), published by the Census Bureau, reported some interesting data:

The estimate of U.S. health care and social assistance revenue for the second quarter of 2015, not adjusted for seasonal variation, or price changes, was $591.3 billion, an increase of 2.2 percent (± 0.8%) from the first quarter of 2015 and up 6.4 percent (± 1.3%) from the second quarter of 2014. The fourth quarter of 2014 to first quarter of 2015 percent change was revised from -0.4 percent (± 1.1%) to -0.5 percent (± 1.1%).

The QSS adds important information to the more widely reported quarterly Gross Domestic Product (GDP) and Employment Situation Summary (ESS) releases that I frequently discuss on the blog.

Examining the detailed tables, revenues of health facilities, net of social services, increased to $550.0 billion in Q2 versus $516.6 billion in 2014 Q2, an increase of 6.07 percent. What is important about the QSS is that it reports both revenue and expenses for the facilities. Expenses grew to $502.2 billion from $472.9 billion, or 5.84 percent. That is, gross margins in health services increased.

The increase in profitability was especially noticeable in hospitals. Hospitals’ net revenue (revenue less expenses) per inpatient day increased to $351 from $321, an increase of 8.33 percent. Net revenue per discharge increased to $2,129 from $1,937, an increase of 9.03 percent.

Truly, hospitals are Obamacare’s big winners.

* * *

For the pivotal alternative to Obamacare, please see the Independent Institute’s new book, A Better Choice: Healthcare Solutions for America, by John C. Goodman.

John R. Graham is a Senior Fellow at the Independent Institute.
Posts by John R. Graham | Full Biography and Publications
We invite your civil and thoughtful comments. Comments will be removed if they make use of profanity, derogatory language, or personal attacks. Repeat offenders may be banned.

  • Catalyst