3 California Hospitals Make Top-50 List of Price Markups for the Most Vulnerable

Thursday, June 11, 2015

Fifty U.S. hospitals, using the health sector’s lack of transparency for cover, have price markups of around 1,000% that devastate uninsured, underinsured and out-of-network patients, as well as those receiving workers’ compensation.

Forty-nine of the 50 are for-profit hospitals, half are owned by one company, 20 are in Florida and three are in California, according to research published in the journal Health Affairs. For-profits own 98% of the Top 50 hospitals, but just 30% of the nation’s facilities. Community Health Systems Inc. owns half of the 50 and Hospital Corp. of America owns a quarter of them.

The Golden State’s Doctors Hospital of Manteca and its sister facility, Doctors Medical Center in Modesto, (both owned by Tenet) are 29th and 30th on the list, with average markups of 960%. Olympia Medical Center of Los Angeles checks in at 40th with a 940% markup.

Gerard Anderson, a professor at the Johns Hopkins Bloomberg School of Public Health and co-author of the study, said:

“There is no justification for these outrageous rates, but no one tells hospitals they can’t charge them. 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.”

But his co-author, Ge Bai, an assistant accounting professor at Washington and Lee University, thought it was also a question of skill. “For-profit players appear to be better players in this price-gouging game,” he said.

The researchers used reimbursable prices set by Medicare as the baseline for measuring markups. The data came from Healthcare Cost Report Information System (HCRIS) computer files obtained from the Centers for Medicare and Medicaid Services for 2012.

A 1,000% markup means a $100 procedure would be billed at 10 times that amount. The average hospital price markup in the U.S. is 3.4 times the cost.

Olympia Medical Center charges $56,103 for chronic obstructive pulmonary disease treatment, compared to the national average of $17,732 and the Medicare reimbursement rate of $5,340. Doctors Hospital of Manteca charges $73,154 for treatment of kidney and urinary tract infections, compared to the national average of $18,280 and the Medicare rate of $5,402.

Hospitals say that the amount billed does not reflect the amount paid, and that discounts often are factored in during the collection process. They also have difficulty collecting from their customers, who, according to the report, tend to be less affluent. The highest price markup in the country―1,260%―was North Okaloosa Medical Center, located in the Florida Panhandle.    

Insurance companies negotiate lower prices for their customers and cover a portion of the bill. More vulnerable patients often pay full freight and one medical hit can quickly lead to big debt, bad credit and bankruptcy. Shopping for the best rates is virtually impossible and stories never cease of 600% differentials between two cross-town hospitals for the same surgery.

The researchers also noted that only two states, Maryland and West Virginia, regulated prices and recommended the federal government and the rest of the states join them. They also suggested mandated price disclosure would be helpful, but pointed out that can be hard to do when you’re sick.

–Ken Broder


To Learn More:

50 U.S. Hospitals Mark Up Prices 1000 Percent for Some Patients, Study Finds (by Lena H. Sun, Washington Post)

National Study Says Doctors Hospital Charges Too Much (by Joe Goldeen, Stockton Record)

50 US Hospitals That Mark Up Prices the Most (by Christopher Wanjek, LiveScience)

Some Hospitals Marking Up Prices More Than 1,000 Percent (Johns Hopkins Bloomberg School of Public Health)

Extreme Markup: The Fifty US Hospitals with the Highest Charge-to-Cost Ratios (by Ge Bai and Gerard F. Anderson, Health Affairs)

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