For-profit hospitals

Higher prices boost HCA Healthcare

A nurses uses a surgical robot in a hospital operating room.
A technician uses a surgical robot in a hospital. Photo: Derek Davis/Portland Press Herald via Getty Images

HCA Healthcare's stock price increased by almost 5% today after the operator of hospitals and surgery centers posted higher-than-expected profits in 2018 and anticipated an even bigger year in 2019.

By the numbers: HCA's "same facility revenue per equivalent admission," an important industry metric that shows how much hospital and clinic prices increased, went up by 3.9% in 2018. That was the highest rate for HCA since 2014, meaning higher prices and medical codes helped fuel the company's big 2018 — in addition to the $551 million in tax savings the company reaped from the Republican tax overhaul.

How hospitals protect high prices

Old man's hand with hospital bracelets
Photo: Andrew Lichtenstein/Corbis via Getty Images

Large hospital systems don’t command high prices just because patients like them, or just because they have strong market share. There's also another big reason: their contracts with insurance companies actively prohibit the sort of competitive pressures a free market is supposed to support.

The big picture: "The free market has been distorted in an unhealthy way," health care consultant Stuart Piltch told the Wall Street Journal’s Anna Wilde Mathews for this deep dive into hospitals’ pricing practices. Hospital systems are consolidating rapidly and buying up physicians’ practices (which charge higher prices once they’re part of a hospital).

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