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Study: Some Hospitals Mark Up Treatments By 1,000 Percent

A new study has found that some American hospitals are marking up the price of medical care by up to 1,000 percent.

The study, which was published in the medical journal "Health Affairs," also found that the average hospital in the U.S. charges people, who are uninsured, triple the amount that is allowed by Medicare for its patients.

Ge Bai, of Washington and Lee University in Lexington, Virginia, and Gerard Anderson, of Johns Hopkins University in Baltimore, Maryland, wrote in their study: "Because it is difficult for patients to compares prices, market forces fail to constrain hospital charges."

The Atlantic notes that the most expensive hospitals, according to the study, were North Okaloosa Medical Center in Crestview, Florida, and Carepoint Health-Bayonne Hospital in New Jersey.

NBC News reports: "Twenty of the hospitals in the top 50 when it comes to marking up charges are in Florida, the researchers write in the journal Health Affairs. And three-quarters of them are operated by two Tennessee-based for-profit hospital systems: Community Health Systems and Hospital Corporation of America."

All but one hospital in the top 50 were for-profit hospitals.

In response, Community Health Systems issued a statement:

Last year, our organization provided over $3.3 billion in charity care, discounts and other uncompensated care for those who can't afford healthcare services Our hospitals also paid millions of dollars in taxes that help fund critically important services in every community where we operate.

The Hospital Corporation of America said in a statement:

Uninsured patients are eligible for free care through our charity care program or they receive our uninsured discounts, which are similar to the discounts a private insurance plan gets.

In addition, we were one of the first providers to make detailed pricing information publicly available; we have been providing this information on hospital web sites since 2007.

However, neither statement explained the sky high prices that the hospitals reportedly charge.

Bai and Anderson wrote in their study: "The increases began in the late 1980s and started to accelerate in 2000. In 1984 the average charge-to-cost ratio was 1.35. In 2004 and 2011 the average charge-to-cost ratio was 3.07 and 3.30, respectively. The markup in 2012, therefore, represents a 10 percent increase from 2004, and 3 percent increase from 2011."

Bai told NBC News:

If I, a CPA, did not understand a hospital bill, how can an average American understand it? We understand the bills for all the other assets we buy. We do not understand the bill for our most valuable asset. That is our health.

Maryland is the only state that sets hospital rates and has been doing so since 1977.

According to the state's Health Services Cost Review Commission website:

The market for health care services in the United States has failed to produce results consistent with the Maryland legislature’s founding goals. The Maryland system shows that a “macro-oriented” approach to regulation, which seeks to correct only for the most obvious market failures, can assist policy-makers in controlling cost growth and, at the same time, enhancing access to care.

Sources: NBC News, Maryland Health Services Cost Review Commission, The Atlantic
Image Credit: Locke Cole


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