Some hospitals marking up prices more than 1,000 percent

See the link for a list of the 50 hospitals.

http://www.eurekalert.org/pub_releases/2015-06/jhub-shm060215.php

Public Release: 8-Jun-2015
Johns Hopkins University Bloomberg School of Public Health

The 50 hospitals in the United States with the highest markup of prices over their actual costs are charging out-of-network patients and the uninsured, as well as auto and workers' compensation insurers, more than 10 times the costs allowed by Medicare, new research suggests. It's a markup of more than 1,000 percent for the same medical services.

The findings, from Gerard F. Anderson of the Johns Hopkins Bloomberg School of Public Health, and Ge Bai of Washington & Lee University, show that the combination of a lack of regulation of hospital charges in the United States and no market competition is leading to price-gouging that trickles down to nearly all consumers, whether they have health insurance or not, and plays a role in the rise of overall health spending. The report is published in the June issue of Health Affairs.

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Of the 50 hospitals with the highest price markups, 49 are for-profit hospitals and 46 are owned by for-profit health systems. One for-profit health system, Community Health Systems, Inc., operates 25 of the 50 hospitals. Hospital Corporation of America operates more than one-quarter of them. While they are located in many states, 20 of the hospitals are in Florida.

"For-profit hospitals appear to be better players in this price-gouging game," says Bai, an assistant professor of accounting at Washington & Lee University. "They represent only 30 percent of hospitals in the U.S., but account for 98 percent of the 50 hospitals with highest markups."

Many hospital patients don't actually pay the "charge master" or 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, as are patients receiving out-of-network care and those receiving workers' compensation or auto insurance benefits. As a result, uninsured patients, who are often the most vulnerable, face exceptionally high medical bills, often leading to personal bankruptcy, damaged credit scores or the avoidance of needed medical services.

The impact of overcharging extends beyond hospital patients. Notes Anderson: "The cost of workers' compensation and auto insurance policies are higher in the states where hospital charges are unregulated because companies must pay those higher rates."

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For the most part, the hospitals with the highest markups are not situated in pricey neighborhoods or big cities, where the market might explain the higher prices. The most expensive hospital is North Okaloosa Medical Center, located in the Florida Panhandle about an hour outside Pensacola. There, patients are charged 12.6 times more than Medicare allowable costs.

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He says that price transparency could also help only to a limited extent because people cannot bargain or comparative shop when they are sick. Most hospitals aren't required to - and don't - publicly share how much they charge for different procedures.

"This system has the effect of charging the highest prices to the most vulnerable patients and those with the least market power," Anderson says. "The result is a market failure."

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