A hospital owned by Sentara Healthcare. Photo: John Greim/LightRocket via Getty Images

Not-for-profit hospital systems are starting to disclose second-quarter financial documents, and the industry's dominant players are having no problem making money.

The bottom line: The number of people staying overnight in a hospital isn't really going up, but that has not affected the profitability of hospital systems — especially those with a lot of brand and market power.

By the numbers: Axios reviewed the financial statements of 16 not-for-profit hospital systems that operate on a calendar fiscal year and hold a lot of power in their regional markets. All of the documents were disclosed within the past week.

  • Similar to the first quarter, most systems posted lower overall surpluses in the first six months of this year because their Wall Street investments have performed worse in 2018 than they did during the booming market of 2017.
  • However, hospital operating margins — which reflect the money that hospitals keep after paying their employees and after paying for routine expenses like drugs and medical equipment — held steady at around 4%.
  • Operating margins were higher, year over year, for more than half of the systems.
  • Sentara Healthcare, which owns hospitals and a health plan in Virginia, had the highest operating margin at 9.1%.

Between the lines: In return for huge tax breaks, not-for-profit hospitals are supposed to reinvest their surplus money into the community. However, that often takes the shape of new buildings and other high-cost projects with the intent of increasing revenue.

  • One example: "The increase in revenue from surgical ventures was attributable to the addition of five new surgical centers in the latter half of 2017 and an additional center in May 2018," executives at RWJ Barnabas Health, a system in New Jersey that was created through mergers, said in a report to bondholders last week.

Reality check: The consolidating industry has given big systems even more power to charge commercial health insurers what they want, and American hospitals' fixed costs are unusually high.

  • However, within the entire health care sector, pharmaceutical companies remain the most profitable, on average.

Go deeper

Updated 49 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 9 a.m. ET: 31,092,895 — Total deaths: 961,301— Total recoveries: 21,274,210Map.
  2. U.S.: Total confirmed cases as of 9 a.m. ET: 6,812,470 — Total deaths: 199,517 — Total recoveries: 2,590,671 — Total tests: 95,108,559Map.
  3. Health: CDC updates guidances to say coronavirus can be spread through the air Nursing homes are evicting unwanted patients.
  4. Politics: Testing czar on Trump's CDC contradictions: "Everybody is right."
  5. Education: College students give failing grade on return to campus.
  6. Business: Unemployment concerns are growing.
  7. World: "The Wake-Up Call" warns the West about the consequences of mishandling a pandemic.
Ben Geman, author of Generate
1 hour ago - Energy & Environment

The climate stakes of the Supreme Court fight

Illustration: Aïda Amer/Axios

Ruth Bader Ginsburg's death and the battle over her vacant Supreme Court seat have real implications for energy and climate policy.

Why it matters: If President Trump replaces her, the court will likely become more skeptical of regulations that claim expansive federal power to regulate carbon under existing law, and perhaps new climate statutes as well.

Dion Rabouin, author of Markets
2 hours ago - Economy & Business

The tech war between the U.S. and China escalates

Illustration: Aïda Amer/Axios

Economic tension between the U.S. and China continues to escalate but is shifting in focus — away from the tit-for-tat trade war and toward a more direct confrontation over the future of technology at the heart of the conflict between the world's two largest economies.

Why it matters: The battle between the U.S. and China was always about tech supremacy and the direct confrontation could result in an accelerated splintering of global supply chains and a significant reduction of international commerce.