HEALTHCARE
June 11, 2015

Astronomical Hospital Mark-Ups

Some hospitals have extreme mark-ups of over 1000%. Many are in Florida; all are for-profit.

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.”

What other industry can you think of that marks up the price of their product by 1,000 percent and remains in business?

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.

Medicare pays hospitals a set amount for each of the various procedures and services hospitals provide for patients. But not everyone has Medicare and many who don't can be charged higher prices for the same services. It's part of what makes the U.S. health care system unique.

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.

Only two states, Maryland and West Virginia, set hospital rates. In the other 48, anything goes.

Twenty of the 50 most expensive hospitals are in Florida. Forty-nine are for-profit hospitals.

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?

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:

  • North Okaloosa Medical Center (FL)
  • Carepoint Health-Bayonne Hospital (NJ)
  • Bayfront Health Brooksville (FL)
  • Paul B Hall Regional Medical Center (KY)
  • Chestnut Hill Hospital (PA)
  • Gadsden Regional Medical Center (AL)
  • Heart of Florida Regional Medical Center (FL)
  • Orange Park Medical Center (FL)
  • Western Arizona Regional Medical Center (AZ)
  • Oak Hill Hospital (FL)
  • Texas General Hospital (TX)
  • Fort Walton Beach Medical Center (FL)
  • Easton Hospital (PA)
  • Brookwood Medical Center (AL)
  • National Park Medical Center (AR)
  • St. Petersburg General Hospital (FL)
  • Crozer Chester Medical Center (PA)
  • Riverview Regional Medical Center (AL)
  • Regional Hospital of Jackson (TN)
  • Sebastian River Medical Center (FL)
  • Brandywine Hospital (PA)
  • Osceola Regional Medical Center (FL)
  • Decatur Morgan Hospital - Parkway Campus (AL)
  • Medical Center of Southeastern Oklahoma (OK)
  • Gulf Coast Medical Center (FL)
  • South Bay Hospital (FL)
  • Fawcett Memorial Hospital (FL)
  • North Florida Regional Medical Center (FL)
  • Doctors Hospital of Manteca (CA)
  • Doctors Medical Center (CA)
  • Lawnwood Regional Medical Center & Heart Institute (FL)
  • Lakeway Regional Hospital (TN)
  • Brandon Regional Hospital (FL)
  • Hahnemann University Hospital (PA)
  • Phoenixville Hospital (PA)
  • Stringfellow Memorial Hospital (AL)
  • Lehigh Regional Medical Center (FL)
  • Southside Regional Medical Center (VA)
  • Twin Cities Hospital (FL)
  • Olympia Medical Center (CA)
  • Springs Memorial Hospital (SC)
  • Regional Medical Center Bayonet Point (FL)
  • Dallas Regional Medical Center (TX)
  • Laredo Medical Center (TX)
  • Bayfront Health Dade City (FL)
  • Pottstown Memorial Medical Center (PA)
  • Dyersburg Regional Medical Center (TN)
  • South Texas Health System (TX)
  • Kendall Regional Medical Center (FL)
  • Lake Granbury Medical Center (TX)

“Extreme Markup: The Fifty US Hospitals with the Highest Charge-to-Cost Ratios” appears in Health Affairs.

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