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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

Caitlin Owens, author of Vitals
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Vaccine-hesitant Americans cite inaccurate side effects

Expand chart
Data: Harris Poll; Chart: Danielle Alberti/Axios

An alarming amount of vaccine-hesitant people who list side effects as a top concern falsely believe the vaccines cause death, DNA alteration, infertility or birth defects, according to recent Harris polling.

Why it matters: Respondents also listed blood clots, which are a real side effect of some coronavirus vaccines, but extremely rare. This survey suggests that misinformation or a skewed understanding of risk may be behind a sizable portion of vaccine hesitancy.

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The new digital extortion

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If you run a hospital, a bank, a utility or a city, chances are you'll be hit with a ransomware attack. Given the choice between losing your precious data or paying up, chances are you'll pay.

Why it matters: Paying the hackers is the clear short-term answer for most organizations hit with these devastating attacks, but it's a long-term societal disaster, encouraging hackers to continue their lucrative extortion schemes.

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The CDC's surprise guidance last week freeing the fully vaccinated to go maskless sowed plenty of concerns across the country— even earning the "Saturday Night Live" treatment for all the questions it spurred.

Why it matters: With plenty of Americans still unvaccinated — and without any good way to confirm who has been vaccinated — some experts worry this could put many at increased risk.