High-markup hospitals, which tend to be for-profit and located in large metropolitan areas, charge up to 17 times the true cost of care, a new study from UCLA found
“Hospital prices affect everyone -- patients, families, employers, taxpayers and government programs, and when hospitals charge excessively, these costs ripple across the health system,” said Sara Sakowitz, a researcher at the university’s David Geffen School of Medicine who led the study. “Patients may be stuck with high out-of-pocket bills, sometimes leading to financial toxicity or even medical bankruptcy. For those with insurance, inflated prices translate into higher monthly premiums and deductibles, which affect families, employers and taxpayers alike.”
Moreover, higher prices don’t translate into better care. Patient outcomes at high-mark-up hospitals are significantly worse than at hospitals that charge an average of three times the cost of care. “In fact, patients at the highest markup hospitals faced greater complications and readmission rates,” she said. “This raises concerns about fairness, transparency and accountability in the health care system, particularly in the current era of value-based care.”
Researchers examined expenditures at nearly 2,000 U.S. hospitals that performed four major elective surgeries -- abdominal aortic aneurysm repair, colectomy, coronary artery bypass grafting and hip replacement. Of those hospitals, 196 were high-markup facilities. Patients at these hospitals had about 45% greater odds of developing cardiac, respiratory, infectious or kidney complications. They also faced a 33% greater risk of being readmitted for a non-elective reason within 30 days of their initial treatment.
“Patients treated at these high-markup hospitals didn’t experience better outcomes; in fact, they often did worse,” Sakowitz said. “In other words, the most expensive hospitals were frequently the lowest-value hospitals.”
Although researchers didn’t have details to examine the geographical variation of high-markup hospitals, previous investigations have found that the 50 hospitals with the highest markup ratios were located in 13 states, three-quarters of which are in the South.
More research into why patient outcomes are worse at high-markup hospitals is needed, Sakowitz said. In addition, policies need to be developed to address price transparency and regulation. Currently only Maryland and West Virginia regulate hospital pricing.
“Patients rarely know what a surgery will cost ahead of time, nor do they have the tools to compare hospitals on both price and quality,” she said. “And in urgent situations, they often don’t have a choice of hospital at all. That means it’s not realistic or fair to expect patients to ‘shop smart’ for surgery in a system that lacks transparency.
“Requiring public, standardized reporting of hospital markups and linking those reports to outcomes would be a first step. Ultimately, this is about building a health care system that is fairer, safer and more accountable to the people it serves.”
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