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A Salt Lake City hospital has made Forbes' first-ever list of the nation's 25 most profitable health centers.
St. Mark's Hospital is No. 9 on the list, with an operating margin of 31 percent and $283 million in net patient revenue, says Forbes. The 250-bed facility is operated by MountainStar, an affiliate of HCA Inc., a massive for-profit chain that claims 11 of the 25 spots.
The list is based on the American Hospital Directory, expense and revenue figures that hospitals must report to the federal Medicare program each year.
Forbes health writer David Whelan pulled data on facilities with more than 200 beds and found 24 with operating margins of 25 percent or more.
"That kind of profit margin compares favorably to drug giants like Pfizer, who are often vilified for charging too much for their drugs. It easily beats the operating profit margin that General Electric reported last year," wrote Whelan.
Profits in the health industry have drawn scrutiny from policymakers concerned about swelling budgets for the government-sponsored health plans Medicaid and Medicare.
Hospitals account for the lion's share of spending. For every $1 spent on health care in the U.S., 31 percent goes to hospitals, 21 percent to physicians and 10 percent to pharmaceuticals, according to a 2009 report by the pharmaceutical lobby.
As Forbes notes, hospitals have been accused of overcharging and discriminating against uninsured and underinsured patients.
A survey of charity care data done earlier this year by The Salt Lake Tribune found Utah's two largest for-profit chains delivered less charity care at a time when patients needed it most.
HCA MountainStar's charity numbers fell 35 percent in 2008, the first full year of the recession. Instead, the hospital pushed cash discounts, or reduced-price care over free care.
On the other hand, Forbes notes there's evidence to suggest that hospitals that run tight financial ships are often those with the best clinical outcomes.
Nevertheless, the list has been criticized by hospitals for using a faulty methodology.
"Taxes we pay were not included in their calculations," said Audrey Glasby, a MountainStar spokeswoman. Nor do data account for the depreciating values of buildings and equipment, she said.
"Long-established St. Mark's is fully depreciated, which influences our profitability," said Glasby, noting that MountainStar has chosen to upgrade rather than replace the building. Money saved is then steered into new technologies and equipment to improve care, she added.
In addition, because HCA owns more than 163 hospitals across the country, it's able to leverage greater purchasing power and centralize administrative functions, capitalizing on economies of scale, she said. —
Forbes announces financially healthy hospitals
O For a slide show from Forbes, visit
http://www.forbes.com and click on "America's Most Profitable Hospitals." The magazine's top 10, based on its analysis of Medicare data:
1. Flowers Hospital • Dothan, Ala., 53 percent margin
2. Del Sol Medical Center • El Paso, Texas, 45 percent margin
3. Rochester Methodist Hospital • Rochester, Minn., 37 percent margin
4. St. Luke's Hospital • Cedar Rapids, Iowa, 36 percent margin
5. Seton Medical Center • Austin, Texas, 34 percent margin
6. Swedish Medical Center • Englewood, Colo., 33 percent margin
7. Doctors Hospital of Augusta • Augusta, Ga., 33 percent margin
8. Ohio State University Hospital • Columbus, Ohio, 32 percent margin
9. St. Mark's Hospital • Salt Lake City, 31 percent margin
10. Northridge Hospital Medical Center • Northridge, Calif., 30 percent margin