Are Hospitals "Incredibly Profitable?"
The data says no.
The most recent issue of the New England Journal of Medicine contains an excellent article about the “corporatization” of health care. The article provides a detailed analysis of just how healthcare has changed over the past half century. There is only one problem with the article, the author claims healthcare is “incredibly profitable”. Havng spent the past half century in the healthcare industry as a physician and physician - executive, I found that statement perplexing. Nearly every hospital and health system I have worked for was in financial distress. Where are these “incredibly profitable” hospitals? Here are the data. The truth is nearly half the hospitals in the country are losing money. Among those that are profitable, margins are much lower than other industries.
About 60 % of U.S. hospitals are financially profitable, but that varies significantly by ownership type, size, and payer mix:
Profitability by Hospital Type
For‑profit hospitals (≈1,214 out of ~5,112 community hospitals, or ~24 %) report the highest operating margins, averaging around 14 % in 2023—well above nonprofits (4.4 %) and public hospitals (3.4 %) healthaffairs.org+15aha.org+15publichealth.jhu.edu+15.
Nonprofit hospitals (≈2,978, or ~58 % of community hospitals) typically operate with modest operating margins (~4 %) and total margins near 9 % aha.org+1newyorker.com+1.
Public hospitals (≈920, or ~18 %) often run with lower margins, averaging 3.4 % operating margin aha.org+15kff.org+15americanprogress.org+15.
Overall Profitability Landscape
A mid‑2023 analysis indicates about 40 % of hospitals were unprofitable, meaning 60 % were operating in the black .
Among large health systems, over two‑thirds (≈67 %) were profitable in early 2024 definitivehc.com+13ascendient.com+13kff.org+13.
Why Some Hospitals Struggle
Rural and safety‑net hospitals often face lower reimbursement rates, especially from Medicaid/Medicare, leading to tighter margins (rural nonprofits ≈3.5 %, rural for‑profits ≈8.5 %) axios.com+5kff.org+5en.wikipedia.org+5.
Payer mix matters: Hospitals with more commercially insured patients (private insurance) tend to have margins around 7.5 %, versus ≈3.3 % for those with predominantly public payers chcf.org.
Bottom Line
Overall, about 60 % of all hospitals are financially profitable.
For-profit hospitals lead the way in profitability, with ~14 % operating margins.
Nonprofits and public hospitals operate far closer to break-even.
Size, ownership, payer mix (commercial vs public insurance), and location (rural vs urban) heavily influence financial outcomes.
Here are the most profitable U.S. hospital systems, ranked by their 2024 operating margins and earnings:
Top For‑Profit Hospital Systems
aha.org+15beckershospitalreview.com+15axios.com+15
Tenet Healthcare (Dallas, TX)28.8% operating margin, operating income of $6 billion on $20.7 billion revenue.
Up from a 12.2% margin in 2023.
beckershospitalreview.com+1barrons.com+1
HCA Healthcare (Nashville, TN)12.1% operating margin, $8.5 billion operating income on $70.6 billion revenue.
Consistent margins around 11–12%.
hospitalogy.com+2beckershospitalreview.com+2aha.org+2
Universal Health Services (UHS) (King of Prussia, PA)10.6% operating margin, $1.7 billion operating income on $15.8 billion revenue.
These three dominate the top tier, with Tenet notably leading in margin percentage.
Top Nonprofit & Integrated Systems
Mayo Clinic (Rochester, MN)
6.5% operating margin, $1.3 billion operating income on $19.8 billion revenue.
kff.org+15beckershospitalreview.com+15beckershospitalreview.com+15
BayCare Health System (Clearwater, FL)9.6% operating margin; $603 million income on $6.3 billion revenue.
Kaiser Permanente (Oakland, CA)
0.5% operating margin; despite thin operations, net income reached $12.9 billion due to roots in insurance.
Others like Sanford Health, Intermountain Health, Banner Health, Cleveland Clinic, BJC HealthCare, and Indiana University Health posted modest single-digit margins (1–5%) en.wikipedia.org+4beckershospitalreview.com+4reuters.com+4.
Sector-Wide Trends
The median operating margin among health systems bounced between roughly 2–3% in 2024 .
The broader hospital industry saw median margins of ~5.2% in 2023, rebounding from pandemic losses kff.org.
Major for-profit systems continue to pull away economically, offering high returns via scale and efficiency; rural and smaller systems lag behind definitivehc.com+11axios.com+11hospitalogy.com+11.
Tenet, HCA, and UHS top the profitability list, with Tenet’s margin almost reaching 30%.
Nonprofit giants like Mayo and BayCare remain strong, but trail behind for-profit peers.
Most health systems work with modest margins—typically 2–6%, with the broader sector around ~5% median.
1. Palomar Health (California)
Recorded an estimated –18.5% operating margin in fiscal 2024—making it one of the worst-performing major systems qa.time.com+15beckershospitalreview.com+15thirdway.org+15.
2. Rural & Safety-Net Hospitals
Around 40% of rural hospitals operated at a negative margin in 2023, with extremely low earnings (≈1.7–3.1%) .
Many rely heavily on Medicaid, which pays below cost, leading to persistent deficits advisory.com+15kff.org+15aha.org+15.
Madera Community Hospital (CA): Closed Jan 2023 after bankruptcy—serving a 30‑mile radius time.com+2en.wikipedia.org+2apnews.com+2.
Over 100 rural hospitals have closed in the past decade due to chronic underfunding thirdway.org+15time.com+15kff.org+15.
3. Mass General Brigham (New England)
Reported a –2.2% operating margin in FY 2024 (≈$113 million loss) apnews.com+3massgeneralbrigham.org+3atholdailynews.com+3.
One of several large systems (Vanderbilt, Yale New Haven, UPenn, Orlando Health) facing significant deficits and layoffs qa.time.com.
4. Allegheny Health Network (Pennsylvania)
Endured sustained losses: $147 million in 2024, $173 million in 2023, and $181 million in 2022 .
5. Steward Health Care
Went bankrupt in May 2024; Ch.11 filed after years of deep losses .
Strategy of selling hospital real estate led to high lease burdens and underfunded operations fiercehealthcare.com+6en.wikipedia.org+6coronishealth.com+6.
New England Sinai Hospital (part of Steward) closed in April 2024 after losing $11 million on just $37M in revenue en.wikipedia.org+1en.wikipedia.org+1.
Why Are These Systems Struggling?
Low reimbursement rates—especially Medicaid and Medicare—leave many hospitals unable to cover costs en.wikipedia.org.
Rural volume and payer mix issues—smaller patient populations and more uninsured or publicly insured patients kff.org+3kff.org+3theguardian.com+3.
High operational costs & debt—labor, supplies, lease payments, cyberattacks, and inflation pressures .
Bottom Line
The hospital systems with the worst financial performance include:
Palomar Health (–18.5% margin)
Numerous rural and safety-net hospitals (~40% operating in the red)
Large systems like Mass General Brigham, Allegheny Health Network, and the now-bankrupt Steward Health Care
These underperformance trends highlight structural challenges in reimbursement, operational scale, and financial resilience across the healthcare landscape.
Trinity Health
For fiscal year 2024, Trinity Health returned to profitability:
Operating income: $66 million (~0.3% margin) after a previous year loss of $288 million trinityhealthma.org+5healthleadersmedia.com+5fiercehealthcare.com+5beckershospitalreview.com+8trinity-health.org+8healthleadersmedia.com+8.
In the first half of fiscal 2025:
Operating margin improved to ~1.2% (≈$147.6 M income) beckershospitalreview.com+2beckershospitalreview.com+2trinity-health.org+2.
Nine-month operating margin stands around 1% (~$198 M) en.wikipedia.org+8fiercehealthcare.com+8beckershospitalreview.com+8.
Strengths: Strong cash flow (~5–5.7% margin), and net income hit $654.6 M in H1 FY25 .
CommonSpirit Health (formed from Dignity + CHI)
Fiscal 2024 saw:
Operating loss of $875 million (~–2.4% margin) on ~$37 billion revenue trinity-health.org+9commonspirit.org+9fiercehealthcare.com+9.
In H1 FY25:
Continued losses of
$196 million (–1% margin) dignityhealth.org+10beckershospitalreview.com+10healthleadersmedia.com+10axios.com+1beckershospitalreview.com+1.
Despite scale, CommonSpirit is leaning into restructuring, but remains in the red.
Providence St. Joseph Health
As of late FY 2024/early FY 2025:
Sequential improvement ending with a positive operating margin around +0.3% (~$53 million profit) beckershospitalreview.com+3fiercehealthcare.com+3en.wikipedia.org+3.
Their latest audited report covers up to December 31, 2024; full-year margins likely aligned with these early gains trinity-health.org.
Summary
Trinity Health has successfully rebounded and is generating modest profits.
Providence has also edged into profitability after previous struggles.
CommonSpirit remains the most challenged, carrying substantial ongoing losses despite being one of the largest systems in the country.
Top-Performing University Medical Centers
These are teaching hospitals with relatively strong operating margins:
Cleveland Clinic (Case Western affiliate)
Operating income of $276 million on $15.9 billion revenue in 2024 (~1.7% margin) ucop.edu+12eab.com+12fiercehealthcare.com+12chiamass.gov+4nyhealthfoundation.org+4shepscenter.unc.edu+4en.wikipedia.org+1beckershospitalreview.com+1.
NYU Langone Health
Revenue ~$14 billion in 2024, with margins around 3%—noted for combining high quality and solid finances en.wikipedia.org+1apnews.com+1.
UPMC (University of Pittsburgh Medical Center)
Non-profit integrated system: revenue $27.7 billion with $198 million operating income in 2023 (~0.7% margin) en.wikipedia.org.
Henry Ford Health, NewYork-Presbyterian, Dartmouth Health
Among top non-system hospitals ranked by Becker’s, these have operating margins between 4%–5% fiercehealthcare.com+3beckershospitalreview.com+3axios.com+3nyhealthfoundation.org+1kff.org+1.
Underperforming UMCs / Academic Hospitals
These teaching hospitals are facing financial strain and operating losses:
UC Davis Health
Operating loss of $3.8 million (~–0.1% margin) ucop.edu+15fiercehealthcare.com+15time.com+15.
UC Irvine Health
Operating loss of $28.7 million (~–1.1% margin) fiercehealthcare.com.
GBMC (Greater Baltimore Medical Center)
Operating loss of $44 million in FY2023, credit rating downgraded by S&P en.wikipedia.org+1axios.com+1.
Mass General Brigham
A major academic system reporting ~–0.4% operating margin (≈$72 million loss) chartis.com+2beckershospitalreview.com+2apnews.com+2axios.com+1fiercehealthcare.com+1.
UPMC also had a slight operating income margin but with noted controversies and margin pressure pmc.ncbi.nlm.nih.gov+8beckershospitalreview.com+8en.wikipedia.org+8.
Overall Trends Among Teaching Hospitals
As a group, academic medical centers operated at a negative median margin in early 2023—unlike community hospitals, which were positive ucop.edu+2chiamass.gov+2eab.com+2.
The 50 largest hospitals, many of them teaching institutions, achieved a median margin of 5.7% by 2023, with revenue growth (~9.3%) slightly outpacing costs (~8.6%) chartis.com+1eab.com+1.
Nevertheless, not-for-profit teaching hospitals continue to face margin pressures into 2024 due to staffing, inflation, and loss of pandemic aid chartis.com.
Key Takeaways
Scale and integration—especially with insurance arms—help large UMCs boost margins.
Smaller academic centers face tighter budget constraints, with deficits erasing COVID-era gains.
Regional teaching hospitals may suffer losses due to operational costs and infrastructure investments.
Healthcare margins—especially in hospitals—tend to be much lower than those in many other major industries like technology, finance, and pharmaceuticals. Here’s a breakdown:
Why Healthcare Margins Are Lower
High fixed and labor costs: Hospitals must staff 24/7, maintain complex infrastructure.
Regulated pricing: Medicare/Medicaid reimbursement often below cost.
Uncompensated care: Emergency care for uninsured patients.
Low scalability: Unlike software, adding more patients = more cost.
Exceptions in Healthcare with Higher Margins
Specialty pharma and biotech firms can have margins over 30%, especially with blockbuster drugs.
For-profit hospitals like Tenet or HCA sometimes exceed 10–15% margins.
Outpatient services (e.g., imaging, ASC chains like SCA or USPI) often see 7–15% margins.