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.

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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.