Hospital profits raise eyebrows as medical costs continue to soar

Forbes magazine this week released its first-ever survey of America's most profitable hospitals, revealing that 24 hospitals with more than 200 beds make 25 cents or more for every dollar of patient revenue they take in. The report is being widely disseminated by the health insurance industry, which is pushing back against claims that health insurance profits — rather than rising medical costs — are to blame for rising premiums.

"Some say profitable hospitals may be using local monopoly to overcharge insurers and patients," reads an article accompanying the survey. "Others see the high profits simply as sign of efficiency and good quality."

Forbes points out that hospital charges account for about a third of healthcare spending, or $718 billion — more than any other single category. The report comes 10 days after Bloomberg ran a lengthy story on how hospital consolidations are running up prices for all manner of procedures.

As consumer prices fell last year for the first time in 54 years, Bloomberg reports, the nation's healthcare bill rose by 5.4 percent to $2.47 billion. That's largely because of the pricing power of local hospital systems, Bloomberg quotes Princeton economist Alain Enthoven as saying. 

"Provider consolidation is driving up health care costs," Enthoven told Bloomberg. "We need effective antitrust enforcement, and we haven't had that for some time."

Topping the Forbes list is the 235-bed Flowers Hospital in Dothan, Ala., which has a 53 percent operating margin. Second, with 45 percent, is the Del Sol Medical Center in El Paso, part of the Hospital Corporation of America (HCA) chain.

Ten other HCA hospitals make up Forbes's Top 25 list, calculated based on operating income figures that hospitals must report to the Medicare program each year.

HCA, whose founders included the family of former Majority Leader Bill Frist (R-Tenn.), paid a record $1.7 billion in fines last decade for massive Medicare and Medicaid fraud. The group's CEO at the time the investigation began — but before the fines were handed down — was current Florida Republican gubernatorial candidate Rick Scott, a vocal opponent of healthcare reform who spearheaded the group Conservatives for Patients' Rights.

Scott was ousted by the board of directors, but was never criminally prosecuted. The Republican establishment made the fraud case a key issue in the gubernatorial primary as it supported state Attorney General Bill McCollum. But now that Scott is their nominee against Democrat Alex Sink, Florida's chief financial officer, the GOP isn't talking about fraud anymore, reports The Associated Press.