Supersized Food Can Mean Undersized Profits for Hospitals

Updated on January 28, 2023

By Joy Stephenson-Laws, JD, Managing Partner, Stephenson, Acquisto & Colman

The British National Health Service (NHS) recently announced plans to ban super-sized chocolate bars and other “big grab” snacks from its hospital shops in an effort to combat obesity. As part of this initiative, the NHS plans to incentivize hospitals with additional funding if they limit most sweets on sale to a maximum of 250 calories.

U.S. healthcare providers would do well to take a cue from their counterparts on the other side of the pond, especially if they hope to maximize an already squeezed profit margin. Unfortunately, when it comes to offering healthier food options in their cafeterias and gift shops, most U.S. hospitals may be “penny wise and pound foolish.”

While many, if not most hospitals, have made great strides in recent years to improve the nutritional value of patient meals, others continue to offer unhealthy food at unhealthy portions in their cafeterias, gift shops, vending machines and canteens. And they often supplement their revenue streams by renting space in their facilities to fast food and coffee chains. In some instances, these rental agreements have clauses that increase the rent based on the renter’s sales, creating incentives for both parties to promote a cheeseburger-and-fries over grilled fish and a salad.  In others, fast food restaurants are permitted to advertise throughout the hospital while in others, the fast-food restaurant makes deliveries to patient rooms.

And it’s not just in the cafeterias that nutrition is getting the short shrift. One study showed that pediatric hospital meal orders rarely meet nutritional guidelines. In one hospital, for example, 44 percent of daily meals exceeded caloric recommendations, 9 percent met fiber recommendations, 36 percent met fat recommendations, and 53 percent included sugar-sweetened beverages. This, of course, may create a situation where healthcare providers end up working against the very illnesses that their own doctors and nurses are trying to treat.

The Real Cost to Hospitals

One financial argument for continuing to offer calorie-dense and nutrient-light foods is that the alternative to offering healthier foods is just too expensive. Factor in the lost rents and revenue-sharing of fast food and other restaurants and the number is significant. It’s not a surprise, then, that too many hospital CFOs, keeping their hospital’s current food offering is seen as being key to operating within a constrained budget with thin profit margins.

On the surface, this makes sense: Reduce food costs, hold or increase food revenues and profit will increase. And from a purely mathematical perspective, this is true. But from a larger perspective, these same administrators may unwittingly be increasing their institution’s risk of increased patient care costs, Medicare readmission penalties, and denied or delayed payor reimbursements.

How are they doing this? Poor nutrition and poor food choices for patients, staff and visitors contribute to nutritional deficiencies and increased rates of obesity. Depending on the length of stay, these food choices may negatively impact treatment outcomes necessitating readmissions and, increased risk for secondary or new diseases that require treatment. To the extent that hospital staff eat this food, it can result in poor staff performance and extended sick leave times, which can have a negative impact on profitability. In other words, the cost savings and revenue realized by not shifting to healthier food operations may actually be reducing their institution’s overall profitability.

What Healthcare Providers Need to Do

There are a lot of things providers can start doing to achieve the dual goals of protecting their bottom lines while enhancing patient and community health. Many hospitals around the country have already taken steps to shift to healthier menus for patients, staff and visitors recognizing that diet can make a big difference in treatment.

This “lead by example” approach includes a wide variety of activities such as:

  • Offering more plant-based diet choices, such as quinoa and brown rice, in patient menus
  • Adding organic foods to their offering and using antibiotic-free meat
  • Reducing the amount of non-healthy, calorie-dense food available in cafeterias
  • Ending contracts with fast-food restaurants renting space on their campuses
  • Supporting local farmers to provide fresh produce for patient, visitors and employee meals

Another key activity is developing and providing useful community education and making sure people have the tools they need to make healthier food choices.  For example, people should not only know what they need to eat but be able to objectively assess their health status on a regular basis throughout their lives to identify dietary or lifestyle changes they may need to make.

Organizations such as the American Medical Association agree. The association recently published a policy statement that called for the reduction of sugar-sweetened beverages and processed meats, and an increase in the availability of healthful, plant-based foods in hospitals. The resolution also calls for hospitals to lead by example. Doing so not only results in healthier patients but a healthier bottom line!

Joy Stephenson-Laws is founding and managing partner of the Law Offices of Stephenson, Acquisto & Colman, Inc. (, the law firm of choice for the healthcare industry and the leader in healthcare reimbursement law. To date, the firm has recovered over $1 billion in unreimbursed, denied or disputed medical claims. In this role, Ms. Stephenson-Laws leads a diverse team of over 100 professionals that includes attorneys, doctors, nurses, technology and healthcare provider operations specialists.  Ms. Stephenson-Laws was awarded the B.A. from Loma Linda University and her Juris Doctor from Loyola University.  She is a member of the American Bar Association, the Consumer Attorneys of Los Angeles, the California State Bar Association, the U.S. District Courts for the Central and Eastern Districts of California, and the Ninth Circuit Court of Appeals.

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