50 hospitals charge uninsured more than 10 times cost of care

Re:50 hospitals charge uninsured more than 10 times cost of ... by nrao123 on Tuesday June 09, 2015 @02:51AM (#9684399)

Whenever I see examples of reported price gouging in sensitive industries like Healthcare, I try & pull up the financials of the companies. Two of the biggest owners of these hospitals are Hospital Corp. of America (Ticker= HCA) & Community Health Systems (Ticker=CHY) (1)

The return on assets (ROA) for HCA is 6.9%: https://ycharts.com/companies/HCA/return_on_assets

The Return on Assets for CYH is ~1.9%: https://ycharts.com/companies/CYH/return_on_assets

This is compared to Google (11.9%), P&G (6.5%) & Walmart (7.9%)

For those not familiar with ROA, it is taken as Net Income/ Total Assets. This should give you a rough idea on the return one gets on the assets / capital deployed. The higher the ROA, the better the earning power.

So, in the case of HCA/CYH, if they are price gouging so much, why aren't they generating far superior returns?

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Updated: Some people in the comments are suggesting that they are only price gouging the un-insured population. But Return on Assets (ROA) metrics are across the population base. So:

if we reduce the price gouging for the un-insured through regulation, then one of two things

a) the return on assets (ROA) go down to uneconomical levels & hospitals go bankrupt (2) - See examples

b) Costs for insured population (e.g. Medicare etc...) goes up to meet return on capital requirements.

What is the tradeoff one needs to make?

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(1)Officials at Community Health Systems of Franklin, Tenn., which operates 25 of the hospitals, and Hospital Corp. of America, based in Nashville, which operates 14, said hospital charges rarely reflect what consumers actually pay. http://www.washingtonpost.com/national/health-science/why-so...

(2) http://www.beckershospitalreview.com/hospital-management-adm...

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Re:50 hospitals charge uninsured more than 10 times cost of ... by rgbrenner on Tuesday June 09, 2015 @03:09AM (#9684432)

Because these prices only apply to the 13% of people that are uninsured. The remainder have an insurance company that negotiates with the hospital on their behalf.

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Re:50 hospitals charge uninsured more than 10 times cost of ... by nrao123 on Tuesday June 09, 2015 @03:30AM (#9684484)

So- if we reduce the price gouging for the un-insured through regulation, then one of two things 1) the return on assets (ROA) go down to uneconomical levels & hospitals go bankrupt (1) - See examples 2) Costs for insured population (e.g. Medicare etc...) goes up to meet return on capital requirements.

What is the tradeoff one needs to make?

(1) http://www.beckershospitalreview.com/hospital-management-adm...

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Re:50 hospitals charge uninsured more than 10 times cost of ... by Gustomaximus on Tuesday June 09, 2015 @03:42AM (#9684517)

Return on assets for HCA is 11.96% according to Yahoo Finance: https://au.finance.yahoo.com/q/ks?s=HCA

This is the same as Google - a company in an monopolistic position for much of their earnings. While I'm not sure I agree ROA is the best way to measure price gouging, using your method and the new statistics, does this change your view?

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Re:50 hospitals charge uninsured more than 10 times cost of ... by omonra on Tuesday June 09, 2015 @10:27AM (#9686086)

You are describing the return to investors.

But what stops the management of these hospitals from paying themselves extremely well (check out who are the top paid people in a random hospital) or spending money on other perks?

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Re:50 hospitals charge uninsured more than 10 times cost of ... by guelo on Tuesday June 09, 2015 @03:10AM (#9684433)

Obviously the answer is that the uninsured are getting gouged because they have no leverage. When the negotiation is between giant corps the playing feel is more competitive.

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