Jan 13, 2020 - Health

Hospitals' dueling financial realities

Illustration of a large golden caduceus beside a tiny stone caduceus

Illustration: Sarah Grillo/Axios

As hospital prices rise and much of the sector continues to rake in cash, rural hospitals continue to shutter.

Why it matters: There's no way to address U.S. health care spending without cutting hospital costs. But blanket cuts could hurt hospitals that are already struggling to keep their doors open, leaving vulnerable patients without access to care.

Driving the news: At least 30 hospitals entered bankruptcy in 2019, Bloomberg reported last week.

  • Rural hospitals' hardships have been well-documented: They serve a shrinking population that has high health needs and is disproportionately uninsured or covered by government insurance.
  • The shutdown of an urban hospital in Philadelphia is evidence that it's not just rural areas that are facing hospital closures.

Yes, but: Some hospital systems are reaping in hefty profits.

  • In an analysis of 48 not-for-profit hospital systems, my colleague Bob Herman last year found that their net profit margin was 8.6%.
  • Bob has also reported that "not-for-profit hospital systems increasingly operate more like corporate titans on the stock exchanges than the charities they promote themselves to be."
  • Private insurers pay hospitals, on average, 241% of what Medicare pays for the same services, and hospitals are by far the largest contributor to U.S. health spending.

Go deeper: How "Medicare for All" would affect hospitals

Go deeper