Becker's Hospital Review

32 FINANCE These 10 Hospitals Have the Biggest Surpluses — and They're Mostly Nonprofit By Ayla Ellison A small percentage of U.S. hospitals earned large profits from patient care services in 2013, and seven of the 10 most profitable were nonprofit hospitals, according to research from the Johns Hopkins Bloomberg School of Public Health and Washington and Lee University. For the study, published in Health Affairs, researchers analyzed fiscal year 2013 data for about 3,000 acute care hospitals. Fiy-nine percent of hospitals analyzed were nonprofit, 25 percent were for-profit and 16 percent were public. To measure profitability the researchers examined net income from patient care services. Although more than half of hospitals lost money on patient care in fiscal 2013, the 10 most profitable each earned more than $163 million, according to the study. Nonprofit Gundersen Lutheran Medical Center in La Crosse, Wis., profited the most from patient care in FY 2013, bringing in $302.5 million, or $4,241 per patient. "e system is broken when nonprofit hospitals are raking in such high profits," said study leader Gerard F. Anderson, PhD, a professor in the Department of Health Policy and Management at the Bloomberg School. "e most profitable hospitals should either lower their prices or put those profits into other services within the community." However, some of the hospitals on the list say the study's methodology for calculating profitability of hospitals that are part of a larger system is flawed. In a statement, Gundersen told the Washington Post that the study does not accurately reflect its cost as an integrated health system with a large Medicare population. Overall, hospitals that are part of a system were most profitable. e study also revealed rural hospitals and major teaching hospitals tended to lose more on patient care than urban hospitals and those with minor or no teaching component. Here are the 10 U.S. hospitals that profited the most from patient care, according to the study. 1. Gundersen Lutheran Medical Center (La Crosse, Wis.) | Nonprofit | Profit: $302.5 million 2. Sutter Medical Center (Sacramento, Calif.) | Nonprofit | $271.9 million 3. Stanford Hospital and Clinics (Palo Alto, Calif.) | Nonprofit | $224.7 million 4. Norton Hospital (Louisville, Ky.) | Nonprofit | $211.2 million 5. Medical City Dallas Hospital | For- profit | $210.3 million 6. Swedish Medical Center (Englewood, Colo.) | For-profit | $192.5 million 7. Hospital of the University of Pennsylvania (Philadelphia) | Nonprofit | $184.5 million 8. Methodist Hospital (San Antonio) | For-profit | $172.4 million 9. Sacred Heart Medical Center (Springfield, Ore.) | Nonprofit | $171.2 million 10. Carle Foundation Hospital (Urbana, Ill.) | Nonprofit | $163.5 million n CHS Sees Profit Plummet, Plans to Sell 10 More Hospitals to Drive Down Debt By Ayla Ellison F ranklin, Tenn.-based Community Health Systems' saw earnings drop significantly in the first quarter of fiscal year 2016. CHS said revenues increased 1.8 percent year over year to nearly $5 billion in the first quarter of FY 2016. However, the hospital operator saw operating income drop nearly 87 percent to $12 million. Total admissions were down 2.6 percent in the first quarter compared to the same period the year prior. When adjusted to include outpatient activity, admissions increased 0.7 percent year over year. CHS recently completed its spinoff of Quorum Health Corp., which includes 38 hospitals across 16 states as well as CHS' hospital management and consulting business. Chairman and CEO Wayne T. Smith said CHS intends to use net proceeds of $1.2 billion from the QHC spinoff to reduce debt. He also said CHS plans to drive down debt further through 10 other divestitures this year. After those transactions are completed, the proceeds should reduce CHS' debt by about $530 million. "As we refine our portfolio into what we anticipate will be a more sustainable, higher-margin group of hospitals, our resources and future investments can be targeted into markets where we have the greatest opportunity to achieve performance improvement in our operations and financial results," said Mr. Smith. CHS ended the first quarter with net income of $11 million, down 86 percent from $79 million in the same period a year earlier. n

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