Hospital Margins Up 9 Percent

This morning’s Quarterly Services Survey (QSS), published by the Census Bureau, reported that:

The estimate of U.S. health care and social assistance revenue for the second quarter of 2015, not adjusted for seasonal variation, or price changes, was $591.3 billion, an increase of 2.2 percent (± 0.8%) from the first quarter of 2015 and up 6.4 percent (± 1.3%) from the second quarter of 2014. The fourth quarter of 2014 to first quarter of 2015 percent change was revised from -0.4 percent (± 1.1%) to -0.5 percent (± 1.1%).

The QSS adds important information to the more widely reported quarterly Gross Domestic Product (GDP) and Employment Situation Summary (ESS) releases that I frequently discuss on the blog.

Examining the detailed tables, revenues of health facilities net of social services increased to $550.0 billion in Q2 versus $516.6 billion in 2014 Q2, an improvement of 6.07 percent. The QSS also reports expenses for the facilities. Expenses grew to $502.2 billion from $472.9 billion, or 5.84 percent. That is, gross margins in health services increased.

The increase in profitability was especially noticeable in hospitals, for with the QSS also reports inpatient days and discharges. Hospitals’ net revenue (revenue less expenses) per inpatient day increased to $351 from $321, an increase of 8.33 percent. Net revenue per discharge increased to $2,129 from $1,937, an increase of 9.03 percent.

Truly, hospitals are Obamacare’s big winners.

Comments (2)

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  1. Brian Williams. says:

    Are “non-profit” hospitals included in these statistics? If so, what’s the functional difference between non-profit and for-profit hospitals? I can’t seem to detect a difference.

    • They actually to report taxable versus non-taxable at the source. I did not want to get into that much detail, especially as taxable hospitals are such a small share of the market. Maybe next quarter, I will!