“There is a real premium in keeping people out of the hospitals,” NAHC President Val Halamandaris has said. Truer words were never spoken, as a new studyfrom Johns Hopkins University reveals that hospitals strategically use enormous markups to maximize revenue.
Researchers found that many hospitals charge more than 20 times the cost of services, particularly for anesthesiology and CT scans, as part of a way to quietly boost revenues in ways patients may not notice or understand. Other high-tech services with very high markups are MRI, electrocephalography (testing brain impulse patterns] and electrocardiology (testing heart electrical patterns).
“Hospitals apparently mark up higher in the departments with more complex services, because it is more difficult for patients to compare prices in these departments,” Ge Bai, who led the study and is an assistant professor at the Johns Hopkins Carey Business School, said in a statement. Lower-tech services like nursing and physical therapy typically had fees far closer to actual cost, according to researchers, lending credence to the notion that hospitals bury huge fees in complicated and high-tech services.
For example, hospitals whose costs for a CT scan are about $100 may charge patients $2,850 for a CT scan, according to the study. The average hospital with more than 50 beds would normally charge $4.32 for every one spent, but the charges spiked dramatically in high-tech departments, with CT departments charging an average ratio of $28.50 for every dollar in cost.
“The high charges have led to personal bankruptcy, avoidance of needed medical services and much higher insurance premiums,” said study co-author Gerard Anderson, a professor at the Johns Hopkins Bloomberg School of Public Health. The colossal markups also “affect uninsured and out-of-network patients, auto insurers and casualty and workers’ compensation insurers,” said Anderson.
“There is no regulation that prohibits hospitals from increasing revenues,” Bai told the journal Live Science. “The problem is when they raise rates on people that have no ability to say no because they have an emergency and cannot compare prices.” This includes uninsured and out-of-network patients, “because they don’t have bargaining power against hospitals,” Bai added.
The gigantic markups were common to both private and non-profit hospitals, but those with the highest markups tended to be for-profit hospitals with dominance in their local market. Essentially, hospitals with the most power to mark up prices were most likely to do so, the study found.