Hospitals up rates despite outrage
Reputations marred after study showed excessive gouging
A year ago, a study about U.S. hospitals marking up prices by 1,000 percent generated headlines and outrage around the country.
Twenty of those priciest hospitals are in Florida, andresearchers at the University of Miami wanted to find out whether the negative publicity put pressure on the community hospitals to lower their charges. Hospitals are allowed to change their prices at any time, but many are growing more sensitive about their reputations.
What the researchers found, however, was that naming and shaming did not work. The researchers looked at the 20 hospitals’ total charges in the quarter of a year before the publicity and compared them to charges in the same quarter following the publicity. There was no evidence that the negative publicity resulted in any reduction in charges. Instead, the authors found that overall charges were significantly higher after the publicity than in previous quarters.
“We were thinking we would see a drop or lowering of some charges,” said Karoline Mortensen, one of the authors of the study published in the Journal of Health Care Finance earlier this year. “There’s nothing stopping them,” she said, referring to the hospitals. “They’re not being held accountable to anyone.”
Researchers say the main factors leading to overcharging are the lack of market competition, lack of hospital transparency and the fact that the federal government does not regulate prices that health-care providers can charge. Only two states, Maryland and West Virginia, set hospital rates.
When the original study was published, shares of Community Health Systems, which owns many of the 50 hospitals listed with the highest markups, traded with almost triple the volume of the preceding weekday, suggesting shareholders had concerns about the system’s pricing practices, the University of Miami researchers said. Share price fell by $1.39 that week, or more than 2.5 percent, but recovered by the end of that week.
Understanding hospital pricing and charges is one of the most frustrating experiences for consumers and health-care professionals.
It is virtually impossible to find out ahead of time from the hospital how much a procedure or stay is going to cost. Once the bill arrives, many consumers have difficulty deciphering it.
After a Utah man posted a photo of his hospital bill on Reddit, showing a $39.35 charge for what he thought was for holding his newborn, his post triggered more than 11,000 comments.
Most hospital patients, covered by private or government insurance, don’t pay full price because insurers and programs such as Medicare negotiate lower rates.
But millions of Americans who don’t have insurance don’t have anyone to negotiate for them and are most likely to be charged full price. As a result, uninsured patients, who are often the most vulnerable, face skyrocketing medical bills that can lead to personal bankruptcy, damaged credit scores or avoidance of needed medical care.