Letters to the editor for Friday, Nov. 24, 2017
November 23, 2017
Greed in healthcare
It's easy to complain bitterly about greedy insurance companies, greedy doctors and hospitals and greedy drug companies, and flaunt their triple-digit profits, as one guest opinion writer did recently, when you mistake income for profit. They are different measures. Income is the gross amount of money received in a period of time less the amount spent on goods and services. Profit from an investor's point of view is the percent of return on investment — income divided by invested capital. In the case of drugs for example, this includes the cost of research and testing. Isn't that what interests you too as a saver? What return you get on the money you invest.
Face it: Health care is expensive. It requires huge capital investments in both equipment and research. It is labor intensive. It is primarily on demand, not as scheduled. It is not at all like selling bread at Smith's where 3 cents on a dollar loaf of bread turns into a 12 percent yearly profit because the inventory turns four times a year, and 12 cents is earned on the dollar capital invested in bread. No hospitals, no doctors, no insurers, and few drug companies make that kind of profit despite their seeing triple digit gains of income over cost of goods and services. Anyone who claims otherwise doesn't know what they're talking about.