Some Hospitals Charge More Than Twice the Cost of Care, Study Finds

The nation's hospitals charge an average of 232% more than gross health care costs, according to a study released Thursday by the Institute for Health and Socio-Economic Policy, the Newark Star-Ledger reports. For the study, commissioned by the California Nurses Association, researchers examined federal cost reports for 4,184 hospitals and 30.4 million patient discharges.

Researchers found that New Jersey ranked highest for health care cost markups, with hospitals in the state charging patients an average of 415% more than the actual cost of care (Stewart, Newark Star-Ledger, 9/10). California ranked second-highest in the nation with an average markup of 355%, and Florida, Pennsylvania, Alabama and Nevada were the next highest-ranking states. Hospitals in Maryland, the state with the lowest average markup, charged an average of 120% more than the actual cost of care, according to the study (Harasim, Las Vegas Review-Journal, 9/10).

The nation's 100 most expensive hospitals charged an average of 673% more than cost, according to the study. The study also found that hospitals charging the highest prices -- often part of larger hospital system chains -- typically had the largest profits (Newark Star-Ledger, 9/10).

CNA spokesperson Charles Idelson said, "There have to be restrictions on price gouging by hospitals and in all areas of the health care industry. High prices prompt health plans to raise premiums and prompt employers to scale back on covered services, increase copays or cut benefits entirely. It's a significant contributor to increasing the number of uninsured who typically go without preventive care and end up in emergency rooms, increasing overall health care costs" (Las Vegas Review-Journal, 9/10).

Mike Tymczyn, a spokesperson for Universal Health Services' Las Vegas hospitals, said, "The study doesn't take into account reinvestment of these profits into new technology, new hospitals and upgrades and the Las Vegas epidemic of uninsured and underinsured" (Swafford, Las Vegas Sun, 9/10). He said that the study also did not address factors such as the increasing costs of hiring, which is "driven in part by a nationwide nursing shortage."

Nevada Hospital Association President and CEO Bill Welch said, "I really do question the motivation for this study. You don't invest losses in building new hospitals in a community. You invest profits. Thank goodness there is money for these corporations to invest in new facilities, new equipment and modernization" (Las Vegas Review-Journal, 9/10). The study is available online. Note: You must have Adobe Acrobat to view the study.