You're still seeing heavy consolidation in the industry which is a clue something fishy is going on-- why would a hospital system choose to grow for instance? where would the $$ come from to buy other ones?
The answer is hospitals target negative operating margins to meet various rules-- even though their "surplus" (ie profit) isn't taxed, it has to be near-0 to maintain non profit status. And, besides the normal games of revenue timing and amortization, they expense profitable activities to related parties.
I agree, someone, somewhere is making money off this stuff and know how to hide it or all these hospital groups would be belly up in a few years. What’s even more scary is all the rural hospitals that are going bankrupt at an escalating pace (in the USA). I have lots of “country folk”relatives and I worry about them. The closest hospital to my mother Is 20 miles away, if that one shuts down the closest is 55 miles away. I have at least 5 within 5 miles of me, 2 of which are major regional surgical/oncology centers because I live in an urban area.
> seeing heavy consolidation in the industry which is a clue something fishy is going on-- why would a hospital system choose to grow for instance
Economies of scale. When an industry faces headwinds, characterised by broad-based low or negative operating margins, the standard move is consolidation.
> why would a hospital system choose to grow for instance? where would the $$ come from to buy other ones
Not all networks are for-profit.
By merging into larger networks, you allow hospital networks to consolidate the very expensive back-office processes like billing, insurance, IT, procurement, staffing, etc.
All the intermediate "glue" needed for medical care has grown expensive due to either compliance or general profiteering, which forced consolidation in order to leverage economies of scale.
This is why both for-profit and non-profit networks have been increasingly merging.
as an outsider to this system of systems, I don't think anyone understand all of the parts, or all of the dynamics going on.. details with factual references are very much appreciated on this weighty subject!
From the other side of the pond:
As my 10-year old summarized some time ago:
”the fire and rescue department needs fires, the police needs criminals and the hospitals need sick people. That’s kinda backwards!”
If these functions in society receive public funding, are of public interest, there should not be any way it’s main objective is to create finacial profit.
The answer is hospitals target negative operating margins to meet various rules-- even though their "surplus" (ie profit) isn't taxed, it has to be near-0 to maintain non profit status. And, besides the normal games of revenue timing and amortization, they expense profitable activities to related parties.