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Gundersen Health chiefs blast Health Affairs study that dubbed nonprofit hospital most profitable

CEO and CFO say data was incomplete and taken from a Medicare cost report that failed to accurately incorporate their full array of costs.

Beth Jones Sanborn, Managing Editor

Gundersen Lutheran Medical Center in La Crosse, Wisconsin. (<a href="">Wikipedia</a>)Gundersen Lutheran Medical Center in La Crosse, Wisconsin. (Wikipedia)

Gundersen Health CEO Scott Rathgaber and CFO Dara Bartels have called a Health Affairs study published this week that dubbed Gundersen Lutheran Medical Center the most profitable hospital in the United States misleading and "simply not true."

The study, published on Monday, listed the nonprofit Gundersen Lutheran Medical Center as earning a profit of $302.5 million, or $4,241 per patient, in 2013, placing them at the top of a list that included more nonprofit facilities than for-profit ones.

Rathgaber and Bartels claimed the data Health Affairs used to rank hospitals' profitability was incomplete and taken from a Medicare cost report that failed to accurately incorporate their full array of costs. Income always looks higher before costs are factored in, the executives said in a letter posted on the system's website.

[Also: Nonprofits dominate list of top 10 most profitable hospitals]

"If the authors had looked at a complete set of data, we wouldn't have been on the list," the two said.

Health Affairs said it analyzed almost 3,000 acute-care hospitals, examining the profit made from actual medical care and excluding money from other sources like investments, grants, donations, parking fees and property rentals. The study's primary author, Ge Bai, an assistant professor of accounting at Washington and Lee University, said the reason was that they wanted to learn what hospitals made from patients alone.

Wisconsin's Gundersen Lutheran Medical Center ranked first, while California-based Sutter Medical Center, also part of a large nonprofit system, came in second. Stanford Hospital, also in California and also a nonprofit, ranked third.

But Rathgaber and Bartels argued their contribution margin for 2013 was about 4.5 percent for their obligated group – the La Crosse Hospital, Clinic, Gundersen Lutheran Administrative Services and Gundersen Medical Foundation and has been low since 2008. They said their operating margin was within that same range.

[Also: Prestigious nonprofit hospitals are pretty good at driving profits, Health Affairs finds]

The pair also criticized the alleged unreliability of Medicare cost reports.

"Medicare cost reports are not uniformly reported, preventing a true "apples to apples" comparison between hospitals and health systems. Analyzing Medicare cost reports of a single care center may have been relevant 20 years ago, but using the same methodology now for an integrated health system network isn't constructive, but is rather a necessary evil as required for Medicare reimbursement," Rathgaber and Bartels said.

They called Gundersen a market leader in a region that Dartmouth Atlas has identified as being among the lowest cost of care per Medicare beneficiary nationwide, and torpedoed the study for not considering a system's quality of care.

"We are also a national leader in providing care in the last two years of life by: spending less per patient episode of care; shortening patients' length of stay in the hospital; having fewer patient complications; and making fewer patient safety errors," Rathgaber and Bartels said.

Twitter: @BethJSanborn