Is a Hospital a Business?

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On September 19, 1994, NBC aired the pilot episode of “ER.” The show revolved around a group of ER doctors and followed a unique “fluctuating pace” formula that invited the viewer inside the chaotic world of a hospital emergency room. The show was, in large part, a commercial and critical success due to the fast-twitch decisions and improvisations that ER doctors must make to save lives making for great TV drama.  Unfortunately, what the hit TV series did not cover were actual operational questions such as how many of these patients would even be able to pay for their services or which insurance providers cover how much for each particular service/procedure or what is the billing code for the mending of a hairline fracture in the left tibia?

Behind the scenes, a hospital can be far less dramatic than depicted on TV. As much as we’d all love to believe that the doctors and nurses of “ER” performed those services out of the kindness of their hearts, the cold reality is that private hospitals aren’t simply giving away ANYTHING for free.

The Business of Health Care

Driving on the highway the other day, I noticed a large billboard owned by STHS ER that read loosely ‘Emergency Care in *blank* minutes’ and in replace of the blank was a red LED ticker that displayed a number on both sides. It was quite unique and attention grabbing. It was large and expertly angled on both sides with legible font and contrasting text so the message could be read easily and, maybe from what I can remember, a nice stock photo along with their logo. For all intents and purposes, the billboard was functioning EXACTLY like an advertisement.

STHS stands for South Texas Health Systems, a hospital network which operates “six acute care hospitals…one behavioral health hospital” and two urgent care facilities according to their website. Specifically, STHS operates the following facilities:

  • Cornerstone Regional Hospital, Edinburg, TX
  • Edinburg Children’s Hospital, Edinburg, TX
  • Edinburg Regional Medical Center, Edinburg, TX
  • Edinburg Regional Rehab Center, Edinburg, TX
  • McAllen Heart Hospital, McAllen, TX
  • McAllen Medical Center, McAllen, TX
  • STHS ER Mission
  • STHS ER Weslaco
  • South Texas Behavior Health Center

STHS, itself, is owned by a much larger hospital management company called Universal Health Services, INC. (UHS). Based out of Pennsylvania, UHS is one of the largest hospital companies in the world with over 225 facilities across the country. According to their website, in 2015, UHS had an upwards of 70,000 employees and cared for 2.5 million patients. UHS is listed as a Fortune 500 company and is publicly traded on the New York Stock Exchange (NYSE: UHS). At the time of this writing, UHS is currently trading at $113.67 per stock and hold annual stockholder meetings. UHS employees a CEO, a President, a CFO, a Treasurer, a VP-Human Resources, and VP-General Counsel. In 2013, UHS collected a net revenue of $7.28 billion, a 5% increase from their $6.91 billion they earned in 2012 and now, most recently, UHS collected a whopping $9.7 billion in revenue in 2015.

Simply put, UHS is a business and STHS and their hospitals are all part of that business.

UHS  has an interest to turn as much a profit as possible back to their stockholders much like McDonald’s, Nike, Coca-Cola, Apple, and Google. What they sell are hospital services and procedures from every single facility they own, including probably a hospital near you. So the next time you watch another TV show like “ER” remember that behind (or really above) every miraculous surgery or life-saving procedure, there are collection of executives looking down making sure every dollar is accounted for.

Moore Law Firm’s principal office is located in McAllen, TX. J. Michael Moore has been defending the rights of residents of the Rio Grande Valley for over 25 years.

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