Arizona hospital profits are increasing at a record rate, report shows

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Arizona hospitals made $1.5B in net operating profits in 2020

PHOENIX - While many businesses suffered during the COVID-19 pandemic, one business, in particular, was booming, bringing in record profits along the way.

Arizona hospitals.

That's according to a recent report from the state.

How much did the hospitals make in the last few years?

The report by the Arizona Health Care Cost Containment System shows hospitals have made steady increases in profits year over year until a 35% jump in 2020.

That's a record of $1.5 billion in net operating profits.

The report says federal COVID-19 relief dollars and a new health care investment fund contributed in large ways while long-term hospital investments came to fruition.

According to the nonprofit health policy research group Kaiser Family Foundation, Arizona isn’t alone.

Kurtika Amin with the foundation says, "While they had high COVID cases in some areas over time, hospitals profitability may not have suffered on net across multiple states."

Banner Health said it made improvements to increase its operating income. One of those improvements is increasing inpatient beds at Banner Estrella.

Keep in mind: Much of the pandemic wasn’t included during this fiscal year reporting.

Nurse, doctor shortage impacting hospitals

Banner Health says the report fails to take into account investments and operating losses in other areas like securing physicians.

Dominique Hamilton works for a different healthcare company but says hospitals across the state need to fill positions immediately. "These expectations are putting profits over patients' lives and putting profits over nurse safety," she said.

Nurses have said repeatedly they feel overworked.

"What’s exhausting is not being able to have enough staff hired by our companies to do our jobs well," she said.

Two dozen nurse positions haven’t been replaced in Hamilton’s unit since the pandemic began.

Banner Health's statement on the report

"Business disruptions and extraneous costs attributed to COVID were sufficiently offset by CARES Act stimulus funds in 2020, with no meaningful upside or downside impact to net operating income.
Banner has improved net operating income in its Arizona hospitals from 2019 to 2020 due primarily to the following activities:

Improved financial results in its academic medical centers, after incurring added capital cost in 2018-2019 from investing nearly $1 billion in new hospital facilities. Operations have matured in these new medical centers yielding favorable results to net operating income.

Banner Gateway continues to mature its MD Anderson partnership and growing its surgical oncology program.

Increases in new inpatient beds (Banner Estrella), improved labor productivity and other operational improvements account for the remainder of year-over-year net operating income improvement.

In addition, the new HealthII Medicaid rate enhancement program which was implemented Oct. 1, 2020 provided a much needed increase in the payment for Medicaid services, previously funded to hospitals at approximately 65% of cost. Banner cares for roughly 40% of all Medicaid hospital patients in Arizona.

The state hospital profitability report only considers hospital financials, and fails to take into account the investments (and operating losses) in other lines of business, such as securing physician services across the communities Banner serves. Banner employs roughly 3,000 physicians and incurs a significant loss in this area. These physician operations are integral to supporting Banner’s hospitals."