National Nurses United: 'Fleecing Patients: Hospitals Charge Patients More Than Four Times the Cost of Care'
TABLE OF CONTENTS
Summary of Findings 5
Introduction 6
Health Expenditures and the
Rising Hospital Profits 12
Rising Hospital Prices 13
Charge-to-Cost Ratio in
Charge-to-Cost Ratio Among Hospital Systems 19
Higher CCRs Correspond to Higher Net Income 21
Highest CCRs by State and Region 23
Beyond Charges:
Other Hospital Practices to Maximize Profit 24
Conclusion 26
Appendices 27
Endnotes 88
SUMMARY OF FINDINGS
"
" Hospital charges over costs have been climbing steadily over the past 20 years--in 1999 hospitals charged on average 200 percent of their costs; by 2018, hospital charges equaled 417 percent of their costs. The average charge-to-cost ratio more than doubled over this time period.
" Over the last 20 years, hospital expenditures have grown faster than overall health care expenditures. Hospital expenditures as a percentage of national health expenditures have increased from 30.8 percent in 1999 to 32.7 percent in 2018. In 2018 hospital expenditures alone comprised close to 6 percent of the national GDP.
" Of the 100 hospitals with the highest charges relative to their costs, for-profit corporations own or operate 95 of them. All of the top 100 hospitals are owned by hospital systems, as opposed to being independently operated community hospitals. The top system is
" For the 100 hospitals with the lowest charge-to-cost ratios, nearly two-thirds do not belong to systems. Only two of the lowest 100 are operated by for-profit corporations, while 60 are owned by government agencies, including four hospitals whose charges do not exceed their costs.
" Higher charge-to-cost ratios tend to be strongly associated with higher hospital profits.
"
INTRODUCTION
As Covid-19 rages across
The health care sector is projected to have some of the fastest annual employment growth through 2028.2 Hospitals also shape the overall economic forces within a community by augmenting the larger local economy through purchases, rentals, and indirect commerce to local businesses. Every dollar spent by hospitals results in
Against this backdrop, this paper examines hospitals' charges, in relation to their costs, by looking at their charge-to-cost ratios (CCRs). CCRs as a metric help us better understand hospital pricing strategies and hospital profitability. While few patients end up paying the gross charges referenced in CCRs, they are a crucial variable in the negotiation of reimbursements from major payers, including insurance companies and government programs. The most current data available, through the end of 2018, shows that hospitals are charging on average over
Since 1999, the average charge-to-cost ratio for all
The fact that millions of Americans are struggling to afford the cost of health care is of particular concern right now as we face the global outbreak and deepening spread of a novel virus. Americans are not only worried about contracting Covid-19, but they are also increasingly worried about paying for the testing and unexpected health expenses that may arise as a result. According to a
High hospital charges play a major role in driving up the costs of Covid treatment.
According to a study by
As noted by health law scholar
As the Covid outbreak deepens, a simple truth remains: increasing hospital charges play a substantial role in our country's skyrocketing health care costs and deteriorating health.
Moving away from their focus on patient care and community service, hospitals have become increasingly fixated on profits, leaving millions of patients and families to suffer.
CONCLUSION
Hospitals have largely abandoned their once traditional roles as community-centered charitable organizations focused on patient care, transforming themselves into powerful corporations focused on maximizing profits. With little or no community accountability or stakeholder representation, hospitals effectively use their economic power to take advantage of their social importance and distort pricing systems. As this report has shown, charges, in relation to costs, have dramatically increased across hospitals over the last two decades. During this period, multihospital systems have dramatically expanded and increased their market power, hospital prices have tripled, and profits have skyrocketed.
All the while, the public has been left with increasingly unaffordable health care, as millions of Americans forego needed medical treatment due to cost and millions more struggle with medical debt. This dynamic, intolerable under normal circumstances, has grown to crisis proportions as our nation faces the continuing health crisis of Covid-19.
This report illustrates the failure of the
Attempts to rationalize the provision of health care in this country have been going on for decades. Rising health costs have been recognized as a problem since at least the 1970s, and have been the target of numerous reform efforts. These reforms, from the Health Maintenance Organization Act of 1973 to the Affordable Care Act of 2010, sought to use market mechanisms to slow cost growth. Nevertheless, health expenditures have continued to increase dramatically through the decades, rising from 8.9 percent of GDP in 1980, to 12.1 percent in 1990, to 17.7 percent in 2018, and they are projected to rise to 19.7 percent of GDP by 2028.82
Market-based reforms, though they have in some cases reduced the amount of care Americans receive, have never slowed for any length of time the continual increase in health spending as a proportion of overall economic activity. If we are not able to alter this trajectory, one-fifth of the
This simple, yet extraordinarily profound reform would dramatically inhibit the ability of hospitals and other providers to continue to increase their charges relative to their costs, and slow the ever-increasing portion of our national income going toward hospital profits and the enrichment of health care executives. It would also expand care to the millions of Americans who cannot afford it, eliminate the cost penalty for seeking care, and eradicate the national blight of medical debt and medical bankruptcies. We have seen single-payer health systems succeed at reducing costs and expanding care in nearly every other wealthy nation on the planet.
The alternative, if we fail to take steps to slow the rising price of health care, will mean the costs of hospital care and other medical services will continue to grow to even more unsustainable and unaffordable levels, exacerbating the suffering and financial burdens of the millions who are already buckling under the weight of our overpriced health care system.
https://act.nationalnursesunited.org/page/-/files/graphics/1120_CostChargeRatios_Report_FINAL_PP.pdf
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