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).

Rank	Industry	Profit Margin
1	Closed-End Fund - Foreign	38.3
2	REIT - Healthcare Facilities	25.2
3	Drug Manufacturers - Major	22.2
4	Publishing - Periodicals	21.8
5	Cooper	20.9
6	Application Software	20.6
7	Cigarettes	19.2
8	Internet Information Providers	18.7
9	Healthcare Information Providers	16.8
10	REIT - Industrial	16.6
11	Agricultural Chemicals	16.4
12	Long Distance Carriers	15.1
13	Networking & Communication Devices	14.4
14	Beverages - Brewers	13.8
15	Personal Products	13.4
16	Oil & Gas Drilling & Exploration	12.8
17	Information & Delivery Services	12.6
18	Beverages - Wineries & Distillers	12.3
19	Air Services, Other	12.3
20	Railroads	12.2
21	Diversified Investments	11.8
22	Gold	11.6
23	Drug Manufacturers - Other	11.1
24	Technical & System Software	10.9
25	Biotechnology	10.7
26	Shipping	10.5
27	Education & Training Services	10.3
28	Medical Instruments & Supplies	10.2
29	Beverages - Soft Drinks	10.1
30	Wireless Communications	9.9
31	Industrial Metals & Minerals	9.9
32	Telecom Services - Domestic	9.6
33	Steel & Iron	9.5
34	REIT - Residential	9.3
35	Processed & Packaged Goods	9.2
36	Electric Utilities	9.2
37	Business Software & Services	9.2
38	Foreign Regional Banks	8.9
39	Personal Services	8.7
40	Semiconductor - Specialized	8.6
41	CATV Systems	8.6
42	Restaurants	8.5
43	Diversified Computer Systems	8.5
44	Regional - Southwest Banks	8.3
45	Diversified Utilities	8.2
46	Cleaning Products	8.1
47	Medical Laboratories & Research	7.9
48	General Entertainment	7.7
49	Gas Utilities	7.7
50	Publishing - Books	7.6
51	Personal Computers	7.6
52	Oil & Gas Equipment & Services	7.4
53	Investment Brokerage - Regional	7.4
54	Toys & Games	7.3
55	Home Health Care	7.2
56	Textile - Apperel Footwear & Accessories	7.0
57	Waste Management	6.9
58	Conglomerates	6.7
59	Accident & Health Insurance	6.7
60	Aerospace/Defence Products & Services	6.6
61	Major Integrated Oil & Gas	6.5
62	Telecom Services - Foreign	6.4
63	Oil & Gas Piplines	6.4
64	Food - Major Diversified	6.4
65	Business Services	6.4
66	Auto Parts Stores	6.2
67	Sporting Activities	5.8
68	Medical Appliances & Equipment	5.8
69	Entertainment - Diversified	5.8
70	Photographic Equipment & Supplies	5.7
71	REIT - Retail	5.6
72	Drug Delivery	5.6
73	Tobacco Products, Other	5.5
74	Diversified Communication Services	5.4
75	Specialty Eateries	5.3
76	Industrial Electrical Equipment	5.3
77	Small Tools & Accessories	5.1
78	Semiconductor - Broad Line	5.1
79	REIT - Office	5.1
80	Pollution & Treatment Controls	5.1
81	Drugs - Generic	5.1
82	Insurance Brokers	5.0
83	Management Services	4.9
84	Research Services	4.7
85	Consumer Services	4.7
86	Confectioners	4.7
87	Information Technology Services	4.4
88	Health Care Plans	4.4
89	Auto Parts Wholesale	4.3
90	Packaging & Containers	4.1
91	Security & Protection Services	3.9
92	Cement	3.9
93	Chemicals - Major Diversified	3.8
94	Industrial Equipment Wholesale	3.7
95	Industrial Equipment & Components	3.7
96	Home Improvement Stores	3.7
97	General Contractors	3.5
98	Aerospace/Defense - Major Diversified	3.5
99	Housewares & Accessories	3.4
100	Hospitals	3.4

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