Most people probably don’t think of hospitals as money makers, and sometimes they’re right — many hospitals are considered non-profit organizations. But this doesn’t seem to stop them from turning a profit, according to a new study published in Health Affairs. Seven of the top 10 most profitable hospitals in the U.S. are non-profit facilities, each earning more than $150 million in 2013.

Gunderson Lutheran Medical Center in La Cross, Wis., takes the top spot on the list with the $302.5 million it earned for patient-care services. Stanford Hospital in Palo Alto, Calif., is also in the top 10 with $225 million, while the University of Pennsylvania’s hospital in Philadelphia earned $184.5 million.

"Most hospitals lose money, but there are a few very profitable ones and we need to pay attention to why they are making so much," lead author Gerard Anderson, a health policy professor at Johns Hopkins Bloomberg School of Public Health, told The Washington Post. He also mentioned the importance of investigating how these profits affect consumers.

Anderson and co-author Ge Bai took a look at the net income for patient-care services for 2013, the most recent year for which fiscal information was available. They excluded any profits the hospitals earned from other services and activities, including donations, investments, parking fees, and sales from gift shops, as these are often used to subsidize patient-care.

"All hospitals should make a little profit," said Bai, who is an assistant accounting professor at Washington and Lee University, "but some hospitals are obtaining outrageous profits."

The study revealed hospitals that were part of a system were generally more profitable due to their ability to dominate the local market, as well as negotiate higher insurance rates. Also, Anderson said, patients end up paying more if their health-care provider is out of network. The highest markups were correlated with the highest profits, something Anderson thinks needs to change.

"Mostly, the hospitals are able to charge more because they can, and they do," he said. "There’s no need for non-profit hospitals to earn substantial profits."

Anderson suggested that hospitals lower their prices or give back more to the community. In these communities, hospitals are often the largest property owners and employers. Those that have non-profit designation receive state and federal tax breaks for providing "charity care and community benefit."

The study did have limitations, including the short period for which it considered data — a single year. Also, that year was 2013, when the federal government mainly based its payments to hospitals on volume. The system, called fee for service, gives hospitals more incentive to do order expensive tests and procedures in order to earn more money. Today though, thanks to the Affordable Care Act, hospital payments reflect more on the quality of care rather than quantity.

In a statement, Gunderson said the study doesn’t accurately reflect its costs, and that the data used excluded some administrative costs that would have altered the hospital’s ranking. Stanford, the third most-profitable hospital, said it used most of its 2013 for capital projects, and that high quality care "is simply more expensive to provide than what is available in a community hospital."

Source: Bai G, Anderson G. A More Detailed Understanding of Factors Associated With Hospital Profitability. Health Affairs. 2016.