Study: For-profit hospitals gouge the uninsured with 1,000 percent mark-ups

For-profit hospitals across the nation are gouging the uninsured by marking up prices by 1,000 percent or more, according to news reports about a study in Health Affairs.
The 50 U.S. hospitals with the most exorbitant prices for their services are charging out-of-network patients and the uninsured, as well as those patients covered by auto and workers’ compensation insurers, more than 10 times the costs considered acceptable by Medicare.

“They are price-gouging because they can,” said study co-author Gerard Anderson, a professor at the Johns Hopkins Bloomberg School of Public Health. “They are marking up the prices because no one is telling them they can’t.”

He added: “These are the hospitals that have the highest markup of all (the nearly) 5,000 hospitals in the United States. This means when it costs the hospital $100, they are going to charge you, on average, $1,000.”

Of the 50 U.S. hospitals that mark up prices the most, 49 of them are part of large for-profit hospital chains.

Few states set any limits on what hospitals can charge. The average mark-up, 1,013 percent among the 50 most expensive medical facilities, is almost three times the average markup at the nation’s other 4,433 hospitals. The average markup for all those other hospitals -- most of them nonprofits -- was 340 percent.
According to The Washington Post, the largest number of hospitals -- 20 -- are in Florida. For the most part, researchers said, the hospitals with the highest mark-ups are not in pricey neighborhoods or big cities, where the market might explain the higher prices.

Topping the list is North Okaloosa Medical Center, a 110-bed facility in the Florida Panhandle about an hour outside of Pensacola. Uninsured patients are charged more than 12 times the actual cost of patient care – a 1,260 percent markup.

The Atlantic’s Olga Khazan took a look at North Okaloosa’s markups. She found, for example, that the hospital charged $79,350 to treat a hemorrhage. That’s compared to Medicare’s reimbursement of $5,177.

Former CIGNA executive-turned-whistleblower Wendell Potter, a prominent watchdog of the health care industry, wrote in a piece for the Center for Public Integrity that hospital executives have fought off state regulations on prices through lobbying and by awarding campaign contributions to lawmakers.

In Florida, the for-profit hospitals have a close friend in the statehouse. Gov. Rick Scott is the former CEO of Hospital Corporation of America, which owns 14 hospitals on the list of 50 gougers.
Another old hand in the business of outrageous mark-ups is Wayne Smith, an executive for for-profits over the past 25 years. Smith is now president of Community Health Services, the company that owns half of the high-markup 50.

As the study’s authors noted in their Health Affairs article, “Collectively, this system (of giving hospitals free rein to mark up their costs) has the effect of charging the highest prices to the most vulnerable patients and those with the least market power.”

Those who are the most vulnerable, of course, are the uninsured and under-insured, Potter wrote. Even when (or if) the Affordable Care Act is fully implemented, there will still be 30 million people without insurance. When those folks get sick or injured and wind up in the hospital, they’ll be on the hook to pay whatever the hospitals decide to charge.
This means, Potter added, that even with the ACA, thousands of families will still find themselves in bankruptcy court every year because of medical bills they can’t possibly pay.