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Hospital charge-to-cost ratio on the rise, says nursing group

Fierce Health Finace, 1/7/14

Some procedures billed more than 10 times their cost, NNU claims

Hospital charges continue to rise, with some procedures billed at more than 10 times their cost, according to a statement from National Nurses United (NNU).

The Institute for Health and Socio-Economic Policy, NNU's research arm. conducted the research and found: 

  • Fourteen hospitals nationwide charge more than $1,000 for every $100 in expenditures, with the widest charge-to-cost ratio (1.192 percent) found at Secaucus, N.J.'s Meadowlands Hospital Medical Center;

  • Hospital charges saw their largest single jump (22 percent) in 16 years between fiscal year 2010-2011 and FY 2012, despite the passage of the Affordable Care Act;

  • Of the nine most expensive hospitals, six are members of Health Management Associates (HMA) or Community Health Systems, which reached a deal to buy HMA last summer;

  • For-profit hospitals on average charged 503 percent of costs;

  • Hospitals run by federal, state, municipal or local governments have far lower-charge-to-cost ratios, with an average charge of only 235 percent of costs; and

  • States with heavily regulated healthcare sectors, such as Maryland, were likely to have lower ratios.

The data are based on Medicare Cost Reports covering the fiscal year ending in September of 2012.

"Such inflated practices continue to price far too many Americans out of access to needed medical care or expose them to financial ruin. It's long past time to rein in the price gouging, and recognize that a healthcare system based on profiteering puts all of us at risk," said Jean Ross, co-president of NNU.

The statement noted that prices were not only high in the hospital sector. Similar ratios are found among medical suppliers, medical labs, insurance companies and outpatient clinics.

Although hospitals have claimed that the charges are rarely so high in practice, "it's a defense that defies logic," Ross said in the statement. "The higher the starting point on a charge, the higher the ultimate reimbursement."

By Zack Budryk

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