Journalist Steven Brill's assertions about profits in the hospital sector in the media are misleading, argues Chris Conover, a research scholar at the Center for Health Policy and and Inequities Research at Duke University in a column for Forbes.
Hospitals are in fact one of the least profitable sectors in the healthcare industry, he writes, and their profits have been on the decline since 2010 (albeit after factoring in nursing home profits). Moreover, Conover writes, while the most recent data from the American Hospital Association bears out Brill's assertion that not-for-profit providers have large profit margins relative to for-profit facilities, in 2012 the overall average profit margin was less than 8 percent.
Hospital profits are significantly less than those of doctors, MBAs and lawyers, Conover writes, as data shows primary care physicians see an average rate of return of more than 15 percent on the money they spent on their medical degrees. Earnings are even higher for specialists, and for lawyers the average rate of return is higher still at 23 percent.
Conover also takes issue with Brill's proposed solution for healthcare's fiscal issues, which calls for regulated oligopolies or heavily regulated monopolies. Continuing to emphasize patient-centered care, which individual providers can take the lead in promoting, holds far more promise for lasting healthcare solutions, he argues.
"American physicians best look out: if Mr. Brill and like-minded reformers get their way in overregulating hospitals, physicians almost assuredly will be next on the chopping block," Conover writes.
Health economist and policy expert Paul Keckley, managing director of the Navigant Center for Healthcare Research and Policy Analysis, similarly disputed some of Brill's assertions in a recent interview with FierceHealthcare, saying that Brill holds hospital executives responsible for issues such as markups in hospital services that are really the responsibility of the chargemaster.
"He rightfully challenges the chargemaster, but the reality is there is not a hospital in the country that collects remotely close to the chargemaster. Hospital revenue is based on negotiated rates, not on retail charges," Keckley says. "I'm sure every hospital CEO would love to get those charges."
To learn more:
- read the column