Monday, March 15, 2010

Health Care Profitability

Everyone's talking about how profitable health insurance companies are (notably on tonight's Daily Show) but the secret is they're not that profitable compared to other industries. The large numbers shot around about increased profits are absolute dollars, not relative to their revenue, and tell us nothing about how profitable an industry actually is. Profit margin (which adjusts for revenue) is a much better measure. And health insurance performs quite bad compared other industries. I got the data from Yahoo Finance; here's the most recent quarter.

Note, REIT is healthcare facilities, not health insurance nor hospitals. According to Yahoo, these companies are in finance...basically real estate for health-related services. Healthcare plans (including Aetna, Wellpoint, Universal Americacore, etc) is number 88. Home health care was 55. Hospitals rank 100 (out of 215).

RankIndustryProfit Margin
1Closed-End Fund - Foreign38.3
2REIT - Healthcare Facilities25.2
3Drug Manufacturers - Major22.2
4Publishing - Periodicals21.8
5Cooper20.9
6Application Software20.6
7Cigarettes19.2
8Internet Information Providers18.7
9Healthcare Information Providers16.8
10REIT - Industrial16.6
11Agricultural Chemicals16.4
12Long Distance Carriers15.1
13Networking & Communication Devices14.4
14Beverages - Brewers13.8
15Personal Products13.4
16Oil & Gas Drilling & Exploration12.8
17Information & Delivery Services12.6
18Beverages - Wineries & Distillers12.3
19Air Services, Other12.3
20Railroads12.2
21Diversified Investments11.8
22Gold11.6
23Drug Manufacturers - Other11.1
24Technical & System Software10.9
25Biotechnology10.7
26Shipping10.5
27Education & Training Services10.3
28Medical Instruments & Supplies10.2
29Beverages - Soft Drinks10.1
30Wireless Communications9.9
31Industrial Metals & Minerals9.9
32Telecom Services - Domestic9.6
33Steel & Iron9.5
34REIT - Residential9.3
35Processed & Packaged Goods9.2
36Electric Utilities9.2
37Business Software & Services9.2
38Foreign Regional Banks8.9
39Personal Services8.7
40Semiconductor - Specialized8.6
41CATV Systems8.6
42Restaurants8.5
43Diversified Computer Systems8.5
44Regional - Southwest Banks8.3
45Diversified Utilities8.2
46Cleaning Products8.1
47Medical Laboratories & Research7.9
48General Entertainment7.7
49Gas Utilities7.7
50Publishing - Books7.6
51Personal Computers7.6
52Oil & Gas Equipment & Services7.4
53Investment Brokerage - Regional7.4
54Toys & Games7.3
55Home Health Care7.2
56Textile - Apperel Footwear & Accessories7.0
57Waste Management6.9
58Conglomerates6.7
59Accident & Health Insurance6.7
60Aerospace/Defence Products & Services6.6
61Major Integrated Oil & Gas6.5
62Telecom Services - Foreign6.4
63Oil & Gas Piplines6.4
64Food - Major Diversified6.4
65Business Services6.4
66Auto Parts Stores6.2
67Sporting Activities5.8
68Medical Appliances & Equipment5.8
69Entertainment - Diversified5.8
70Photographic Equipment & Supplies5.7
71REIT - Retail5.6
72Drug Delivery5.6
73Tobacco Products, Other5.5
74Diversified Communication Services5.4
75Specialty Eateries5.3
76Industrial Electrical Equipment5.3
77Small Tools & Accessories5.1
78Semiconductor - Broad Line5.1
79REIT - Office5.1
80Pollution & Treatment Controls5.1
81Drugs - Generic5.1
82Insurance Brokers5.0
83Management Services4.9
84Research Services4.7
85Consumer Services4.7
86Confectioners4.7
87Information Technology Services4.4
88Health Care Plans4.4
89Auto Parts Wholesale4.3
90Packaging & Containers4.1
91Security & Protection Services3.9
92Cement3.9
93Chemicals - Major Diversified3.8
94Industrial Equipment Wholesale3.7
95Industrial Equipment & Components3.7
96Home Improvement Stores3.7
97General Contractors3.5
98Aerospace/Defense - Major Diversified3.5
99Housewares & Accessories3.4
100Hospitals3.4


I thank Mark Perry who did a table for August of 2009. (Insurance companies dropped by two ranks since then.)

2 comments:

john said...

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Adli Yusof said...

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