Some Hospitals Mark Up Prices More Than 1,000 Percent: Study

Forty-nine of the 50 hospitals with the highest price markups are for-profit. Twenty of the hospitals in the report are located in Florida

Dozens of U.S. hospitals are hiking up healthcare costs more than 1,000 percent – over 10 times the costs allowed by Medicare – and for the same medical services, new findings indicate.

New research out of Johns Hopkins Bloomberg School of Public Health and Washington & Lee University revealed that the 50 U.S. hospitals with the highest price markups are inflating health care costs far above actual prices by charging uninsured and out-of-network patients over 10 times the amount permitted by Medicare. The report was published in the June issue of Health Affairs.

“We as consumers are paying for this when hospitals charge 10 times what they should,” Gerard F. Anderson, professor at the Bloomberg School’s Department of Health Policy and Management at Johns Hopkins and coauthor of the study said, according to a press release. “What other industry can you think of that marks up the price of their product by 1,000 percent and remains in business?” he said.

Forty-nine of the 50 hospitals with the highest price markups are for-profit. Twenty of the hospitals in the report are located in Florida.

The report indicated that on the whole, hospitals with high markups are not exclusively located in high-cost cities. The priciest hospital, the study says, is North Okaloosa Medical Center, about an hour outside of Pensacola, Florida, where patients are charged 12.6 times more than costs allowed by Medicare.

In the report, Anderson and Ge Bai of Washington & Lee University, revealed that poor oversight of hospital charges as well as a lack of market competition are causing the severe price gouging. Consumers both with and without insurance are bearing the exorbitant costs.

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

Anderson said price transparency could help to an extent, but currently most hospitals are not required to publicly share costs for 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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