--- title: "5 By 5: The High Cost of Provider Size" description: In our second installment in the 5 By 5 series breaking down data on healthcare, we look at provider size and its impact on profitability. image: https://www.z5inventory.com/hubfs/Blog%20Header%20-%205%20by%205%202.jpg --- [Skip to content](https://www.z5inventory.com/blog/5-by-5-part-2#main-content) [![Group 1211](https://www.z5inventory.com/hubfs/Group%201211.png)](https://www.z5inventory.com) - [Solutions](https://www.z5inventory.com/solutions) - [Z5 Count](https://www.z5inventory.com/solutions-2021-0-1) - [Z5 Fixed Asset](https://www.z5inventory.com/solution/fixedassetcount) - [Z5 Analytics](https://www.z5inventory.com/solutions-2021-0) - [Z5 Optimization](https://www.z5inventory.com/solutions-2021-0-0) - [Who We Serve](https://www.z5inventory.com/solutions-2022) - Company - [About Us](https://www.z5inventory.com/contact-2021) - [Contact Us](https://www.z5inventory.com/contact) - [Careers](https://www.z5inventory.com/careers) - [Blog](https://www.z5inventory.com/blog) - [Login](https://prod.z5development.com/) # 5 By 5: The High Cost of Provider Size [Alex Diamond](https://www.z5inventory.com/blog/author/alex-diamond) 11/19/2019 ![Our 5 By 5 series continues with a look at healthcare provider size and its impact on profits. ](https://www.z5inventory.com/hs-fs/hubfs/Blog%20Header%20-%205%20by%205%202.jpg?width=784&name=Blog%20Header%20-%205%20by%205%202.jpg) This is Part 2 of our series [**5 By 5**](https://www.z5inventory.com/blog/topic/5-by-5), which examines all the ways that data informs us about healthcare and some of the ways it hinders us.  In this edition, we're looking at one of the not-so-surprising drivers behind the high cost of healthcare: the size of healthcare providers. Since the [Adventist-St. Joseph merger](https://www.modernhealthcare.com/mergers-acquisitions/california-ag-rejects-adventist-st-joseph-merger) is only the latest large merger to encounter resistance, let's get the big one out of the way.  **30%** lower operating margins can be observed [across U.S. healthcare providers](https://www.modernhealthcare.com/operations/health-system-expansion-dented-profitability-report-finds). That's comparing 2018 to 2015, and though 2018 was a bit of a rebound year, the period between 2015-2017 saw margins tank more than 38%. Why should that be the case?  **50%** higher [merger and acquisition activity](https://www.kaufmanhall.com/sites/default/files/legacy_files/2017-in-Review_The-Year-that-Shook-Healthcare.pdf) took place between the years of 2012-2017 versus the previous five-year span. That number dipped slightly in 2018, as did the dent to profitability that providers were experiencing. Sure, there are lots of numbers affecting margins, but it does give pause to the thought that larger groups are safer from financial instability. But... **2%** higher [pay raises were given to executives](https://www.managedhealthcareexecutive.com/news/factors-impact-healthcare-executive-compensation) at larger, higher-revenue health systems. So maybe that's one reason for the higher-ups to push for expansion. Which pairs interestingly with the fact that... **47%** of hospital leadership says that [increasing salaries are the top source of pressure](https://www.beckershospitalreview.com/finance/47-of-hospital-leaders-say-salary-increases-are-top-expense-pressure.html) on their expenses (and, therefore, profitability). In fact, that more than doubled the next-closest pressure, which is - you'll never guess - strategic growth. Why might that not be more widely discussed?  **72%** of Modern Healthcare's annual list of [healthcare's most influential people](https://www.postbulletin.com/life/health/study-ceo-s-have-overtaken-the-healthcare-conversation/article_49ca1208-0167-11ea-a140-8360e82fe7c5.html) is comprised of CEOs.   We're certainly not suggesting any cover-up or even conscious manipulation of the healthcare narrative in this country. But it is telling that - despite the constant [pressure to reduce costs in supply chain](https://www.beckershospitalreview.com/supply-chain/1-in-10-hospitals-struggle-with-cutting-supply-chain-costs-survey-finds.html) - the biggest impediments to reducing the cost of healthcare just might be the expansion of provider networks and the personnel expenses that come with it.  We're offering [several solutions](https://www.z5inventory.com/solutions) to the supply chain cost problem. It just might be up to you to combat the rest.    Next time we'll talk about the high cost of saving money on healthcare tech. Come back in two weeks. We’re counting on you.     [selling medical inventory](https://www.z5inventory.com/blog/topic/selling-medical-inventory) [supply chain](https://www.z5inventory.com/blog/topic/supply-chain) [supply chain management](https://www.z5inventory.com/blog/topic/supply-chain-management) [medical supply](https://www.z5inventory.com/blog/topic/medical-supply) [digital supply management](https://www.z5inventory.com/blog/topic/digital-supply-management) [survey data](https://www.z5inventory.com/blog/topic/survey-data) [healthcare inventory](https://www.z5inventory.com/blog/topic/healthcare-inventory) [buying medical inventory](https://www.z5inventory.com/blog/topic/buying-medical-inventory) [healthcare data](https://www.z5inventory.com/blog/topic/healthcare-data) [patient data](https://www.z5inventory.com/blog/topic/patient-data) [5 by 5](https://www.z5inventory.com/blog/topic/5-by-5) ## Leave a Comment ## Related Posts ### [11/5/2019 5 By 5: Data On Healthcare's Customers](https://www.z5inventory.com/blog/5-by-5-part-1) ### [12/2/2019 5 By 5: Cyber Insurance Saves Millions](https://www.z5inventory.com/blog/5-by-5-part-3) ### [7/2/2019 What The 5 in Z5 Stands For - Our Core Values](https://www.z5inventory.com/blog/what-the-5-in-z5-stands-for-our-core-values) ![Group 1212](https://www.z5inventory.com/hubfs/Group%201212.png) Z5 Inventory was founded with the purpose of saving health care providers nationwide from expiring product, empowering them to Count, Reallocate, and Buy their inventory all in one place. - [Solutions](https://www.z5inventory.com/solutions) - [Z5 Count](https://www.z5inventory.com/solutions-2021-0-1) - [Z5 Analytics](https://www.z5inventory.com/solutions-2021-0) - [Z5 Optimization](https://www.z5inventory.com/solutions-2021-0-0) - Company - [About Us](https://www.z5inventory.com/contact-2021) - [Contact Us](https://www.z5inventory.com/contact) - [Careers](https://www.z5inventory.com/careers) - [Blog](https://www.z5inventory.com/blog) - [Privacy Policy](https://www.z5inventory.com/privacy-policy) - [Get The App](https://www.z5inventory.com/platform) - [Apple App Store](https://apps.apple.com/us/app/z5-count/id1557711721) - [Google Play](https://play.google.com/store/apps/details?id=com.z5inventory&gl=US) - [Dashboard Login](https://prod.z5development.com/) © 2026 All rights reserved. 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