Medicare Inpatient Profitability in US Hospitals

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The Impending Need for Cost-Efficiency

[By Objective Health]

Medicare patients often account for the largest proportion of inpatient volume for an average US hospital. With the exception of outlier cases, Medicare inpatient services are adjusted for wage rates and reimbursed as a single predetermined payment across the country.

Over the next few years, Medicare is expected to substantially reduce growth in payment rates, thereby pressuring hospitals to become more cost-efficient.


Medicare OH



This infographic highlights the need for hospitals to manage costs, showing that there is a wide variation in Medicare inpatient profit across US hospitals, which is primarily driven by differences in Medicare cost per case.


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3 Responses

  1. Will increased revenue at for-profit hospitals lead more states to expand Medicaid?

    That question seems obvious given a new report by PwC’s Health Research Institute that showed increased revenue among the nation’s five largest for-profit hospital chains in Medicaid expansion states.



  2. Are Medicare cuts causing private insurer cuts?

    In an economic letter from the Federal Reserve Bank of San Francisco, Jeffrey Clemens, Joshua Gottlieb, and Adam Shapiro make the case that Medicare cuts in rates paid to hospitals induce private insurer cuts.

    They focus on the 2% reduction in Medicare payments after April 1st, 2013, as required by the Budget Control Act of 2011 (AKA sequestration).



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