Some U.S hospitals are marking up their prices for common procedures and drugs by over 1,000 percent. To them, it's simply good business practice. To others, it's an outrage.
“There is no justification for these outrageous rates but no one tells hospitals they can't charge them,” says Gerard F. Anderson, a professor of health policy and management in the Bloomberg School of Public Health in a statement. “For the most part, there is no regulation of hospital rates and there are no market forces that force hospitals to lower their rates. They charge these prices simply because they can.”
Anderson is the director of the Johns Hopkins Center for Hospital Finance and Management and co-author of a recent study that lists the 50 U.S. hospitals with the highest mark-ups.
What other industry can you think of that marks up the price of their product by 1,000 percent and remains in business?
The study looked at the rates hospitals were charging in 2012.
On average, hospital rates were 3.4 times what Medicare paid. The top 50 hospitals charged more than 10 times what Medicare paid, led by Florida's North Okaloosa Medical Center, which charged on average 12.6 times the Medicare allowable cost.
Twenty of the 50 most expensive hospitals are in Florida. Forty-nine are for-profit hospitals. One for-profit health system, Community Health Systems, Inc., operates 25 of the hospitals. Another, Hospital Corporation of America, operates more than one-quarter of the 50 hospitals.
Many patients don't actually pay the full price. Along with government insurers, most private health insurers negotiate lower rates for their patients. But 30 million uninsured Americans are likely to be charged the full rate. This means that the people who can least afford to pay it are charged the most. And these charges can be catastrophic.
Anderson doesn't expect hospital charges to drop unless more states or the federal government step in and set maximum charges. Price transparency can only help to a limited extent. After all, who's going to stop and comparison shop when they think they're having a heart attack?
Twenty of the 50 most expensive hospitals are in Florida. Forty-nine are for-profit hospitals.
As Anderson asks, “What other industry can you think of that marks up the price of their product by 1,000 percent and remains in business?”
The 50 Hospitals with Highest Charge-to-Cost Ratios, 2012:
“Extreme Markup: The Fifty US Hospitals with the Highest Charge-to-Cost Ratios” appears in Health Affairs.