Health Care Costs Going Up – But So Are Hospitals Profits

By Richard West on September 2, 2010, 1:42 pm

Businesses normally pass on costs to their consumers when prices go up, and this includes taxes although, few people realize this. The unfortunate state of education in America’s school system is partly responsible, although this is just common sense. What is not usual is when prices go up and profits rise. The Oil companies achieved record profits when oil cost more than four dollars per gallon and people cut back on consumption. When health care costs rise, hospitals are recording an increase in their own profits.

Why Are Hospital Profits Increasing?

There are two potential reasons for profit to rise. The first is that the costs passed onto the consumer are in excess of what they need to maintain their old levels of net income. The second reason is that more people are using the services now than ever before. Not all patients are illegal immigrants who go into the emergency room to get free coverage. Without actual proof of which cause is responsible, it is hard to determine if the hospital administrators or simply greedy or benefiting from receiving more paying patients. Jumping to conclusions is a dangerous in this situation.

 

Hospitals Are Businesses That Exist to Make a Profit

Despite the recent mantra that health care is a right; doctors, nurses, and many other employees of hospitals still expect to be paid. Many of the larger hospitals have stockholders and businesses also have responsibilities to the people who own shares of control in the company. The competing demands for reasonable health care costs and turning a profit is not always compatible. If profits are rising even though costs are going up, an investigation may reveal the cause of the problem. Hospitals can keep the same level of profits by raising the prices they charge customers and insurance companies only as much as their own costs go up.

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4. Helath Care Reform: Medical Care Costs Increase – Along With Profits
5. Health Insurance: Obamacare May Affect Wall Street Insurance Stocks