New York Times Examines For-Profit Hospitals’ Increasing Earnings
The New York Times on Sunday examined the financial performance of for-profit hospitals, which have reported "surging" earnings as a result of increased admissions and higher prices. Admissions at for-profit hospitals have increased over the past few years as a result of an aging population and "because managed care companies are less adamant about keeping people out of hospitals," the Times reports. In addition, many for-profit hospitals "dominate" their markets, which allows them to raise prices for services. Shares of five of the eight publicly traded hospital systems have posted increases this year, and the other three have "easily outperformed the overall market." HCA Inc., the nation's largest for-profit hospital system, and Tenet Healthcare Corp., the second-largest, have posted 20% increases in their stock price this year, and Triad Hospitals, the third-largest, has posted a larger increase. According to the Times, "there is little to suggest a reversal anytime soon." Michael Smith, an analyst for Strong Funds, said that the current favorable trend in hospital prices should continue in the future. In addition, many not-for-profit competitors face financial problems that may force them to close. According to the Times, the for-profit hospital "industry's biggest risk may be that it will do too well ... in a time when government policy makers are already worried about rising health care costs" (Abelson, New York Times, 8/4).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.