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For-profit hospitals mark up the most

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Researchers looked at the 50 U.S.  hospitals with the highest charge-to-cost ratios in 2012.

The researchers, whose study appeared in HealthAffairs, found that these hospitals had markups (ratios of charges over Medicare-allowable costs) about 10 times their Medicare-allowable costs compared to a national average of 3.4 and a mode of 2.4. Analysis of the 50 hospitals showed that 49  are for profit (98 percent), 46 were owned by for-profit hospital systems (92 percent), and  20 (40 percent) operate in Florida.

The researchers concluded: “While most public and private health insurers do not use hospital charges to set their payment rates, uninsured patients are commonly asked to pay the full charges, and out-of-network patients and casualty and workers’ compensation insurers are often expected to pay a large portion of the full charges. Because it is difficult for patients to compare prices, market forces fail to constrain hospital charges. Federal and state governments may want to consider limitations on the charge-to-cost ratio, some form of all-payer rate setting, or mandated price disclosure to regulate hospital markups.”

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