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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

Neera Tanden withdraws nomination for Office of Management and Budget director

Neera Tanden testifying before the Senate Budget Committee in Washington, D.C., in February 2021. Photo: Anna Moneymaker/The New York Times/Bloomberg via Getty Images

Neera Tanden withdrew her name from nomination to lead the Office of Management and Budget after several senators voiced opposition and concern about her qualifications and past combative tweets, President Biden announced Tuesday.

Why it matters: Tanden’s decision to pull her nomination marks Biden's first setback in filling out his Cabinet with a thin Democratic majority in the Senate.

What's ahead for the newest female CEOs

Jane Fraser (L) and Rosalind Brewer. Photos: Jason Redmond/AFP via Getty Images; Rodrigo Capote/Bloomberg via Getty Images.

The number of women at the helm of America’s biggest companies pales in comparison to men, but is newly growing — and their tasks are huge.

What's going on: Jane Fraser took over at Citigroup this week, the first woman to ever lead a major U.S. bank. Rosalind Brewer will take the reins at Walgreens in the coming weeks (March 15) — a company that's been run by white men for more than a century.

3 hours ago - Health

Biden says U.S. will have enough vaccines for 300 million adults by end of May

President Biden. Photo: Anna Moneymaker-Pool/Getty Images

President Biden on Tuesday said that ramped-up coronavirus vaccine production will provide enough doses for 300 million Americans by the end May.

Why it matters: That's two months sooner than Biden's previous promise of enough vaccines for all American adults by the end of July.