{ "study": { "slug": "hospital-ownership-margins", "title": "For-profit, nonprofit, or government: who owns America's hospitals, and which model makes money", "standfirst": "Across 6,019 US hospitals in the federal HCRIS cost reports, for-profit facilities are the only ownership class earning a positive average operating margin — +0.19% — while nonprofit hospitals average −4.75% and government hospitals −62.38%. The ranking holds on every measure, but the gap is narrower than the averages suggest.", "desk": "financial-distress", "article_type": "Original Research", "published": "2026-06-11", "issue": 55, "doi": "10.5072/fonteum/hospital-ownership-margins-2026", "url": "https://fonteum.com/research/hospital-ownership-margins", "methodology_version": "hospital-ownership-margins/v1" }, "data_as_of": "2026-05-24", "datasets": [ { "slug": "cms-hospital-compare", "name": "CMS Hospital Compare", "publisher": "CMS — Hospital quality (Care Compare)", "upstream_url": null } ], "key_findings": [ { "number": "+0.19%", "finding": "average operating margin for for-profit hospitals — the only ownership class in the black, versus −4.75% for nonprofits and −62.38% for government hospitals", "dataset": "cms-hospital-compare" }, { "number": "65.0%", "finding": "of for-profit hospitals post a positive operating margin, against 44.1% of nonprofits and just 20.8% of government hospitals", "dataset": "cms-hospital-compare" }, { "number": "67.6%", "finding": "of government hospitals are financially distressed (operating margin below −5%) — nearly two and a half times the 27.1% for-profit rate", "dataset": "cms-hospital-compare" }, { "number": "−12.30%", "finding": "median operating margin for government hospitals — the honest center once 84 state psychiatric hospitals are stopped from dragging the −62.38% average", "dataset": "cms-hospital-compare" } ], "faqs": [ { "q": "Which type of hospital is most profitable — for-profit, nonprofit, or government?", "a": "For-profit. In the federal HCRIS cost reports, for-profit hospitals are the only ownership class with a positive average operating margin, +0.19%, and 65% of them earn money on operations. Nonprofits average −4.75% and government hospitals −62.38%. The for-profit lead holds on the median and revenue-weighted views too." }, { "q": "Why do government hospitals show a −62% operating margin?", "a": "The average is distorted. Eighty-four standalone state psychiatric hospitals are funded by state appropriations, not Medicare, so the cost report captures their costs but almost none of their revenue, producing margins worse than −1,000%. The median government hospital runs −12.30% — still the weakest class, but not a −62% collapse." }, { "q": "Are nonprofit hospitals really losing money?", "a": "On Medicare-cost-report operating margin, the average nonprofit runs −4.75% and 56% post an operating loss. But operating margin excludes investment income, which favors large nonprofits with endowments. On a revenue-weighted basis the nonprofit sector earns 9.02%, so the sector is profitable in aggregate even where the typical facility is not." }, { "q": "What is operating margin and why use it instead of total margin?", "a": "Operating margin is patient-care revenue minus operating expenses, divided by revenue — the profitability of core hospital operations. Total margin adds non-operating income, chiefly investment returns. Operating margin is the cleaner ownership comparison because it strips out endowment effects that flatter large nonprofits and say nothing about how a hospital runs." }, { "q": "Why are for-profit hospital margins higher?", "a": "Selection, more than efficiency. For-profit systems site in better-insured markets, carry lighter Medicaid exposure, and emphasize higher-margin elective and surgical service lines while avoiding low-margin trauma, burn, and behavioral-health units that anchor public hospitals. Medicare pays everyone below cost, so the margin gap comes from the commercial book of business." }, { "q": "Can I reproduce these ownership-and-margin figures?", "a": "Yes. Every number is a direct aggregation over hospital_directory joined to hcris_facility_summary on the CCN, from the 2026-05-24 HCRIS snapshot of 6,019 hospitals. The exact SQL is in the reproducibility block below, and both ownership type and margin come from the same CMS-2552-10 cost report, so the join is internally consistent." } ], "citation": { "apa": "Fonteum Research. (2026, June 11). For-profit, nonprofit, or government: who owns America's hospitals, and which model makes money. Fonteum Research, Issue 55. https://doi.org/10.5072/fonteum/hospital-ownership-margins-2026", "url": "https://fonteum.com/research/hospital-ownership-margins" }, "reproducible_sql": "-- Hospital ownership mix & margins — fully reproducible query.\n--\n-- Source: CMS Healthcare Cost Report Information System (HCRIS), hospital\n-- cost report form CMS-2552-10 (HOSP10FY2024.ZIP).\n-- Snapshot: cms-hcris-hospital-2552-10 / 2026-05-24, 6,019 facilities.\n-- Tables: public.hospital_directory (ownership_type from Worksheet S-2\n-- Part I \"Type of Control\"; public, read-only)\n-- public.hcris_facility_summary (operating_margin_pct, total_margin_pct,\n-- net_patient_revenue, net_income; public, read-only)\n-- Join key: ccn (CMS Certification Number) — the same backbone used by\n-- hospital-margin-gap and hospital-distress-rural-access.\n--\n-- Every headline figure in the study resolves to one of the rows below.\n\n-- 1) Margin by ownership class — the central finding (facility-average lens).\nSELECT\n d.ownership_type,\n count(*) AS hospitals,\n count(h.operating_margin_pct) AS with_margin,\n round(avg(h.operating_margin_pct), 2) AS avg_op_margin_pct,\n round((percentile_cont(0.5) WITHIN GROUP\n (ORDER BY h.operating_margin_pct))::numeric, 2) AS median_op_margin_pct,\n round(avg(h.total_margin_pct), 2) AS avg_total_margin_pct,\n count(*) FILTER (WHERE h.operating_margin_pct > 0) AS positive_margin,\n round(100.0 * count(*) FILTER (WHERE h.operating_margin_pct > 0)\n / nullif(count(h.operating_margin_pct), 0), 1) AS pct_positive,\n count(*) FILTER (WHERE h.operating_margin_pct < -5) AS distressed,\n round(100.0 * count(*) FILTER (WHERE h.operating_margin_pct < -5)\n / nullif(count(h.operating_margin_pct), 0), 1) AS pct_distressed\nFROM public.hospital_directory d\nJOIN public.hcris_facility_summary h ON h.ccn = d.ccn\nGROUP BY d.ownership_type\nORDER BY avg_op_margin_pct DESC;\n-- proprietary 1785 1730 +0.19 +6.91 +4.28 1124 65.0 468 27.1 (for-profit — only positive class)\n-- nonprofit 3034 2996 -4.75 -1.77 +4.43 1320 44.1 1183 39.5\n-- government 1200 1061 -62.38 -12.30 -0.56 221 20.8 717 67.6\n\n-- 2) Revenue-weighted (dollar-weighted) operating margin per class — the\n-- outlier-robust lens. Ranking is identical to (1); levels are all positive\n-- because the simple average in (1) is dragged by tiny facilities.\nSELECT\n d.ownership_type,\n round(100.0 * sum(h.net_income) / nullif(sum(h.net_patient_revenue), 0), 2)\n AS rev_weighted_op_margin_pct,\n round(sum(h.net_patient_revenue) / 1e9, 1) AS total_net_patient_rev_billions\nFROM public.hospital_directory d\nJOIN public.hcris_facility_summary h ON h.ccn = d.ccn\nWHERE h.net_patient_revenue IS NOT NULL\nGROUP BY d.ownership_type\nORDER BY rev_weighted_op_margin_pct DESC;\n-- proprietary 16.39 168.5\n-- nonprofit 9.02 1092.3\n-- government 7.55 237.8\n\n-- 3) National baseline (all classes pooled).\nSELECT\n round(avg(operating_margin_pct), 2) AS national_avg_op_margin,\n round((percentile_cont(0.5) WITHIN GROUP\n (ORDER BY operating_margin_pct))::numeric, 2) AS national_median_op_margin,\n count(operating_margin_pct) AS with_margin\nFROM public.hcris_facility_summary;\n-- -13.84 -1.46 5787\n\n-- 4) The extreme-negative tail that inflates the government average: 84 public\n-- hospitals report an operating margin below -100%. The named worst are\n-- standalone STATE PSYCHIATRIC hospitals — funded by state appropriations,\n-- so Medicare net patient revenue (the cost-report denominator) is a tiny\n-- fraction of their real budget. This is why the government MEDIAN (-12.30%)\n-- is the honest central tendency, not the -62.38% mean.\nSELECT d.hospital_name, d.state, d.ccn, round(h.operating_margin_pct, 1) AS op_margin_pct\nFROM public.hospital_directory d\nJOIN public.hcris_facility_summary h ON h.ccn = d.ccn\nWHERE d.ownership_type = 'government' AND h.operating_margin_pct IS NOT NULL\nORDER BY h.operating_margin_pct ASC\nLIMIT 10;\n-- OSAWATOMIE STATE HOSPITAL KS 174022 -5305.3\n-- TRENTON PSYCHIATRIC HOSPITAL NJ 314013 -4326.4\n-- FLORIDA STATE HOSPITAL FL 100298 -3799.3\n-- GREYSTONE PARK PSYCH. HOSPITAL NJ 314016 -2799.3\n-- ... (all top-10 are state psychiatric hospitals)\n\n-- 5) For-profit ownership share by state (states with >= 40 reporting hospitals).\nSELECT\n d.state,\n count(*) AS hospitals,\n count(*) FILTER (WHERE d.ownership_type = 'proprietary') AS for_profit,\n round(100.0 * count(*) FILTER (WHERE d.ownership_type = 'proprietary')\n / count(*), 1) AS pct_for_profit\nFROM public.hospital_directory d\nJOIN public.hcris_facility_summary h ON h.ccn = d.ccn\nGROUP BY d.state\nHAVING count(*) >= 40\nORDER BY pct_for_profit DESC\nLIMIT 8;\n-- NV 53 33 62.3\n-- LA 201 116 57.7\n-- PR 61 35 57.4\n-- TX 573 320 55.8\n-- FL 269 145 53.9", "license": "U.S. Government Works (federal sources; 17 U.S.C. §105)", "generated_by": "Fonteum — https://fonteum.com", "notes": "Aggregate, source-traced figures frozen to the snapshot above. Reproduce by running reproducible_sql against the cited federal dataset; no per-entity records are included." }