Sep 19, 2019

Health care profits explode

Illustration: Sarah Grillo/Axios

The health care industry continued to rake in record-level profits in the second quarter, with its year-over-year earnings increasing by 23%, according to an Axios analysis of 160 companies.

The bottom line: Pharmaceutical firms and hospitals, in particular, are reaping some of the largest rewards even amid the sustained public furor over drug prices and surprise medical bills.

Where it stands: We updated our health care earnings tracker to include 48 not-for-profit hospital systems, many of which also own health insurance companies, and we will add more as more financial documents are released.

By the numbers: Big Pharma remains the cash king.

  • Drug companies collected almost half of all health care profits despite generating less than 20% of industry revenue.
  • 12 of the 16 most profitable companies in Q2 were pharmaceutical firms.
  • This theme should sound familiar.

The intrigue: Hospitals don't retain as much money as drug companies, but their prices and Wall Street investments are still leading to sizable windfalls.

  • The combined net profit margin for this sample of hospital systems was 8.6%. That's lower than the extremely profitable first quarter hospitals had, but above average for the entire group.
  • 17 of the 55 companies in the analysis that had net margins of at least 10% in Q2 were not-for-profit hospital systems.

The big picture: The profits don't just lead to hefty paydays. They allow the industry to amass a war chest to fend off piecemeal reforms and larger-scale overhauls like Medicare for All.

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Health care stocks aren't having a great year

Data: FactSet; Chart: Axios Visuals

The stock prices of major health care companies have not kept pace with the broader market so far in 2019, even though the industry is flush with cash.

The bottom line: Medicare for All and other health care reforms floated by Democratic presidential candidates, as well as higher-than-expected medical costs at health insurance companies, have made investors nervous about the future.

Go deeperArrowOct 15, 2019

Four health care questions for a better Democratic debate

Photo: Win McNamee/Getty Images

If tonight’s Democratic debate is anything like the earlier ones, it will feature an extended back-and-forth about whether to eliminate private health insurance, and then move on from health care. But there’s a whole lot more that’s also worth asking about.

The big picture: We basically know what the candidates will say about the question of private insurance, because they’ve said it all before. So here are four other questions that might also help illuminate the choice voters face on such a deeply personal, wildly complex topic.

Go deeperArrowOct 15, 2019

Health care's fraud and abuse laws are getting overhauled

Doctors are at the center of changes to self-referral and anti-kickback laws. Photo: Katherine Frey/The Washington Post via Getty Images

The Trump administration is proposing to loosen regulations that prohibit doctors from steering patients insured by federal programs to facilities where they have a financial interest and that outlaw health care companies from offering bribes and kickbacks in exchange for patient referrals.

Why it matters: The industry has long clamored for an overhaul to these laws, which companies say obstruct their goals of providing "value-based care." But critics worry the broad and vague changes could engender more fraud and abuse than there already is.

Go deeperArrowOct 10, 2019