Research Guide · Money & Power
Who Profits From American Healthcare?
American healthcare is not one system but a chain of separately profitable businesses — insurers, drug makers, pharmacy benefit managers, hospital systems, and increasingly private equity — each earning money at a different link in the chain a patient never sees. Naming who profits isn't an accusation that every participant acts improperly; it's the first step in understanding why the incentives are what they are.
The actors, and how each makes money
Insurers earn more, in the short run, by paying out less — through underwriting, network design, and claim review. Denials that are ultimately overturned on appeal still delay and deter care in the meantime; 82% of Medicare Advantage prior-authorization denials are reversed when a patient actually appeals.
Pharmacy benefit managers (PBMs) sit between manufacturers, insurers, and pharmacies, negotiating rebates that don't always reach the patient at the counter. Three PBMs — CVS Caremark, Express Scripts, and OptumRx — handle roughly 8 in 10 U.S. prescriptions, and each is owned by the same corporate family as a major insurer, meaning the negotiator, the payer, and the pharmacy are often branches of one company.
Hospital systems and physician groups have consolidated sharply; 78% of U.S. physicians are now employed by a hospital or corporate entity rather than working independently. Consolidation gives systems more leverage in price negotiations with insurers — leverage that research shows translates into higher prices, not better outcomes.
Private equity has moved aggressively into hospitals, physician practices, nursing homes, and more over the past decade. A 2023 JAMA study found hospital-acquired conditions rose about 25% after private equity acquired a hospital. A broader systematic review found cost increases in nine of twelve studies on PE ownership, and decreases in none.
Pharmaceutical manufacturers set list prices, and a meaningful share of the underlying science behind new drugs was paid for by taxpayers through the NIH — more than $100 billion in NIH funding contributed to the science behind every one of 210 new drugs approved 2010–2016.
Profit, revenue, and extraction aren't the same thing
It matters to distinguish terms precisely. Revenue is money that comes in; profit is what's left after costs; margin is profit as a share of revenue; a return on investment is what an investor earns on capital deployed. None of these are, by themselves, evidence of wrongdoing — hospitals, insurers, and drug companies are businesses, and businesses need revenue to operate. The more useful question this site tries to answer isn't whether anyone made money, but where the specific evidence shows that a structure or incentive raised prices, denied care, or captured public money without a corresponding benefit to patients — the pattern documented throughout Behind the System and Hostile Takeover.
Understanding who profits is the first step. The next is understanding why reforms haven't changed it.
Every figure on this page traces to a primary source in the annotated bibliography.