5/02/16

‘Most profitable’ hospitals list omits key data

A report in the journal Health Affairs explores hospital revenue and places Carle on a list of most profitable U.S. hospitals. However, the researchers admit pieces of information are missing in their analysis. Those omissions are significant.

This study considers just one year, an unprecedented year in which Carle Foundation Hospital received additional and one-time government payments.

In 2013, the hospital received payments from the Illinois Department of Healthcare and Family Services for hospital-access improvement for June 2012-December 2013 of $6.1 million and Medicare Cost Report settlements from the federal government for 2007, 2008 and 2012 of $5.5 million. More importantly,the study does not look at the complete cost of the care provided because it does not include the physician practice piece of Carle, which had losses of almost $45 million during this same time frame.

“By looking at the hospital revenue for patient care in isolation, the effect falsely increases the profitability, not taking into account real costs for which real dollars were expended,” said Scott Hendrie, vice president of finance and treasury for Carle.

“Hospitals within a system may be subsidizing other affiliated entities in the system that benefit the community, such as sister hospitals and physicians located in low-income communities, home health and other important community services,” said Danny Chun, Illinois Hospital Association.

Carle reinvests revenue into patient care, including $44 million in charity care at cost to more than 27,000 people in 2013 and far more in the years since.

“Nonprofit hospitals reinvest all net income into furthering high-quality health services. When a hospital has a positive bottom line, those funds are reinvested into the latest technology, newer equipment, modern facilities, highly trained staff and other programs that ensure access to quality healthcare services and benefit the health of their community,” said Chun.

By the authors’ own admission, the study does not include accurate information about Case Mix or the complexity of care for patients, which varies from year to year and hospital to hospital, depending upon patients’ needs. Carle sees patients with more serious illnesses from a very large geographic region. This creates an unbalanced comparison of data among the nation’s hospitals.

Carle always focuses on improving quality and lowering costs so we can meet the area’s tremendous need for lifesaving care. Like the study’s authors, we embrace efforts to contain healthcare costs and look forward to discussion of how we and the industry can continuously improve for patients.