Wonder where all the money coming into the health care system goes? When it comes to large, publicly-traded health care companies, like pharmaceutical giants, for-profit hospitals and insurers, a new study from the Yale School of Medicine offers an answer.
Between 2001 and 2022, “we found that they distributed $2.6 trillion to shareholders,” said Dr. Victor Roy, assistant professor of family medicine and community health at the University of Pennsylvania.
Roy is lead author of “Shareholder Payouts Among Large Publicly Traded Health Care Companies,” published recently in JAMA Internal Medicine.
Ninety five percent of the profits went, not to researching newer drugs or building better hospitals, but to corporate shareholders through dividends and share buybacks, the study found. Shareholder payouts also increased more than threefold during the 21-year-period.
The researchers said rising health care costs deserve more scrutiny, both for their impact on patients and on government-subsidized health care in the U.S.
“One out of eight adults owes more than $10,000 in medical debt, and on the other hand, we have billions of dollars that are being sent out to these large shareholders,” said Dr. Cary Gross, a professor at the Yale School of Medicine, and study co-author. “It really raises the question of how much money is enough for our for-profit health care companies to be taking from our health care system?”
Gross said ongoing consolidations in the health care industry would mean more money taken away from the system by shareholders.
“In American society, often bigger is perceived as better,” he said. “In health care, we’ve found that bigger is often not better. We have your health insurer, is also your doctor’s office, is also your pharmacy. Businesses are not being run with patients front and center.”
Private equity money was not part of this data, Gross said. In the last 10 years, private equity invested more than $1 trillion in U.S. health care, with critics saying investors siphoned out profits leaving local hospitals with debt.
