Great piece but it's missing a couple of nuances & I would love to hear more from you on them
1) In the pharma section, how profitable is the specialty pharmacy they are running. My suspicion is VERY (I hear it is 50% of Northwell's total profit) and also in pharma, what about 340b -- PhRMA is spending a lot on Redddit telling me that it's a huge boon to hospitals
2) the $22bn of "equity in the house". Some of that is land/buildings which isnt liquid, some of that is invested in the stock market and acts like a hedge fund. Whatever the latter number is, how did it get so big given the alleged low profitability of the main business, and what do they do with all the profits they make there. Just reinvest?
Sorry for the late reply - this comment actually sent me down a pretty deep rabbit hole!
On pharmacy - yeah, I dug into that. It’s clearly a big business, although I still couldn’t isolate how profitable it is or how much of it is 340B from the public filings.
But your second question was the really interesting one. A lot of that “equity in the house” isn’t the house - it’s investments. And those investments have grown less because the hospitals keep producing huge margins and more because a very large investment portfolio keeps compounding.
It’s weird, right? The hospital can look like a thin-margin business from year to year while the institution around it keeps getting wealthier. I ended up making a whole chart about it and really should publish the thing. https://datawrapper.dwcdn.net/sS8mD/1/
So hospitals are usually thin margin (HCA and Tenet excepted), although the odd non-profit system can sometimes make it up to 10%. most much lower.
I guess the $22bn is about 1/2 buildings or not liquid. The question is before that investment fund/hedge fund grew based on the S&P500 increase, how did it start?
Honestly why I took so long to respond…. it felt unsatisfactory that I chalked it up to “investments”. It’s hard to get a deeper look how they grew so much of their portfolio in 15 years, but it’s probably built off of the previous 200. It’s clearly something that the smart folks at MGB are doing… I wouldn’t say it’s insidious or anything, but it’s a bad look when crying hospital-rich, margin-poor given the state of healthcare costs.
Great piece but it's missing a couple of nuances & I would love to hear more from you on them
1) In the pharma section, how profitable is the specialty pharmacy they are running. My suspicion is VERY (I hear it is 50% of Northwell's total profit) and also in pharma, what about 340b -- PhRMA is spending a lot on Redddit telling me that it's a huge boon to hospitals
2) the $22bn of "equity in the house". Some of that is land/buildings which isnt liquid, some of that is invested in the stock market and acts like a hedge fund. Whatever the latter number is, how did it get so big given the alleged low profitability of the main business, and what do they do with all the profits they make there. Just reinvest?
Anyway, please keep doing these!!
Sorry for the late reply - this comment actually sent me down a pretty deep rabbit hole!
On pharmacy - yeah, I dug into that. It’s clearly a big business, although I still couldn’t isolate how profitable it is or how much of it is 340B from the public filings.
But your second question was the really interesting one. A lot of that “equity in the house” isn’t the house - it’s investments. And those investments have grown less because the hospitals keep producing huge margins and more because a very large investment portfolio keeps compounding.
It’s weird, right? The hospital can look like a thin-margin business from year to year while the institution around it keeps getting wealthier. I ended up making a whole chart about it and really should publish the thing. https://datawrapper.dwcdn.net/sS8mD/1/
So hospitals are usually thin margin (HCA and Tenet excepted), although the odd non-profit system can sometimes make it up to 10%. most much lower.
I guess the $22bn is about 1/2 buildings or not liquid. The question is before that investment fund/hedge fund grew based on the S&P500 increase, how did it start?
Honestly why I took so long to respond…. it felt unsatisfactory that I chalked it up to “investments”. It’s hard to get a deeper look how they grew so much of their portfolio in 15 years, but it’s probably built off of the previous 200. It’s clearly something that the smart folks at MGB are doing… I wouldn’t say it’s insidious or anything, but it’s a bad look when crying hospital-rich, margin-poor given the state of healthcare costs.