A few large hospitals outside the Twin Cities were very profitable in 2015, a new report finds, even as many small rural medical centers in Minnesota posted relatively low margins or outright losses.
The annual study from Allan Baumgarten, an independent health care analyst in St. Louis Park, adds a wrinkle to a report last month from the Minnesota Hospital Association that found rural hospital systems have been lagging those in the Twin Cities in terms of median financial performance.
Baumgarten drew on different data focused primarily on hospital services, and found outstate health systems often include one or two big hospitals that post sizable profits. The large sums more than offset the financial results, he said, of smaller medical centers in rural areas that are affiliated with the health systems.
"These large hospital systems that are outside the Twin Cities — some of their large hospitals like St. Cloud Hospital or like Mayo Rochester are doing very well," he said. "Within those systems, some of the smaller hospitals are losing money. But it pales by comparison to how well the major hospitals within those systems are doing."
The Minnesota Hospital Association argued that Baumgarten's report is flawed because it primarily factors revenue and income for hospital services, and doesn't reflect overall health system financials, including everything from clinics and nursing homes to ambulance services.
Those non-hospital services often generate lower profit margins or financial losses, so the "net income/margin data reported [by Baumgarten] is overstated by a factor of 2 and 3 times," the hospital association said in a statement.
The trade group said it disagreed with Baumgarten's comment that some large hospitals beyond the Twin Cities are doing very well, saying instead that those medical centers "have net margins that are sustainable."
"Bottom line, this report overstates the financial health of Minnesota's hospitals and health systems," the Minnesota Hospital Association said in its statement.