St. Luke’s Cited as One of Country’s Most Profitable Hospitals; Officials Disagree

By Cindy Hadish, Reporter

Tools

By Tracey McCullough

Story Created: Sep 1, 2010 at 8:06 PM CDT

Story Updated: Sep 1, 2010 at 8:06 PM CDT

CEDAR RAPIDS - St. Luke’s Hospital officials dispute a listing that ranks the Cedar Rapids hospital as the fourth most profitable in the country.

In today’s edition of Forbes Magazine, Wednesday, Sept. 1, a story called America’s Most Profitable Hospitals states that St. Luke’s has an operating margin of 36 percent.

St. Luke’s officials said the hospital’s true operating margin last year was 5.4 percent.

Forbes magazine received their information from the American Hospital Directory, which uses financial data reported by hospitals to the Centers for Medicare and Medicaid Services.

“The article incorrectly states that St. Luke’s Hospital is one of America’s Most Profitable Hospitals and has inaccurately posted that we have an operating margin of 36 percent,” hospital officials wrote in a statement.

“St. Luke’s is not alone in disputing the data source with the American Hospital Directory.”

Officials noted that the information does not accurately reflect St. Luke’s complete financial picture because many support services and administrative department expenses were omitted from the directory’s calculation of operating margin.

St. Luke’s expenses were correctly reported on the cost report submitted to Medicare, they said.

The article quotes Scott Kallemeyn, director of operations support at St. Luke’s, who notes that payments to its parent hospital system for information technology and financial services weren’t captured, nor is equipment depreciation.

Forbes’ article, by David Whelan, states that some hospitals “make colossal profits. Are they running a tight ship or using monopoly power to overcharge patients?”

The article found that 24 hospitals in the country with over 200 beds make an operating margin of 25 percent or more and compared the profit margins to companies like drug giant Pfizer.

Flowers Medical Center in Dothan, Ala., was cited as the most profitable hospital, with a 53 percent operating margin. Flowers is part of a for-profit chain.

St. Luke’s, part of the Iowa Health System, is a non-profit, so revenue is reinvested back in the hospital.

Iowa Health System is the sixth largest nondenominational health system in America, with annual revenues of $2 billion, the group notes on its website. Seven hospitals belong to the Iowa Health System, with a total of 25 affiliated hospitals.

Next Article Cedar Rapids Community Leaders, Police Work to Curb Summer Crime

Conversation Guidelines

Be Kind

Don't use abusive, offensive, threatening, racist, vulgar or sexually-oriented language.
Don't attack someone personally. Keep it civil and be responsible.

Share Knowledge

Be truthful. Share what you know and what you are passionate about.
What more do you want to learn? Keep it simple.

Stay focused

Promote lively and healthy debate. Stay on topic. Ask questions and give feedback on the story's topic.

Report Trouble

Help us maintain a quality comment section by reporting comments that are offensive. If you see a comment that is offensive, or you feel violates our guidelines, simply click on the "x" to the far right of the comment to report it.

read the full guidelines here »

Commenting will be disabled on stories dealing with the following subject matter: Crime, sexual abuse, property fires, automobile accidents, Amber Alerts, Operation Quickfinds and suicides.