New Data: Hospital Charges Leap 22 Points Just in Most Recent Year

Skyrocketing hospital charges have become a major factor in driving up overall healthcare costs, and exaggerating a healthcare crisis nationally as increasing numbers of Americans are priced out of access to needed medical care or pushed into financial ruin or bankruptcy, say nurses.

It’s also a reminder of the ongoing gaping hole in the Affordable Care Act on its weak provisions for controlling costs, says National Nurses United, the nation’s largest organization of registered nurses, following release of new national and California data on the relationship of hospital charges to hospital costs.

The findings reveal:

• U.S. hospitals charge on average $331 dollars for every $100 of their total costs, in statistical terms a 331 percent charge to cost ratio.
• While hospital charges over costs have been climbing steadily over the past 15 years – the charges took their biggest leap ever in 2011– a 22 point vault.
• From 2009 to 2011 (the most recent year for which the data is available), hospital charges lunged upward by 16 percent, while hospital costs only increased by 2 percent.
• U.S. hospital profits, pushed upward by the high charges, hit a record $53.2 billion, while nurses see more and more hospitals cutting patient services and limiting access to care.

“There is no other word for this than price gouging,” said Deborah Burger, RN, co-president of NNU whose research arm, the Institute of Health and Socio Economic Policy produced the findings based on an analysis of publicly available Medicare Cost Reports.

“The consequences for patients and families are immediate and severe. High hospital charges get passed along by insurance companies to employers and individuals. Employers drop health coverage or shift the burden of cost to workers, many of whom then must choose between getting the care they need or paying other bills in a still stagnating economy for so many,” Burger said.

• NNU also released data for California showing that California hospitals soared past the national average with a charge to cost ratio of 451 percent, or $451 for every $100 of costs.

NNU’s findings augment data released recently by Medicare on hospital charges for select individual medical procedures. The NNU data goes the next step showing total hospital charges over cost. The RNs say the findings show a trend of exploding charges – especially in the two years since the market crash – and they warn of the devastating effects.

In California, for example, the California Healthcare Foundation last month issued a report showing that since 2002, premiums in California have risen by 170% -- more than five times the inflation rate. During that same period the number of California employers providing coverage dropped from 71 percent to 60 percent; 21 percent said they’d increased workers’ co-insurance premiums while 17 percent said they had reduced benefits or increased other out of pocket costs. More than one-fourth of workers in small firms have deductibles of $1,000 or more on their health plan.

Hospital industry claims that the charges don’t matter because few actually pay the “list” price “defy common sense,” Burger said.

“If there is no reason for the high prices, why bother charging them?” Burger asks. “The reason should be obvious. The more they charge the more they get paid – the very reason why these pricing practices have such a significant impact on driving up health costs.”

Hospitals generally negotiate with insurance companies on payments. The higher the starting point on a charge, the higher the ultimate reimbursement. Uninsured individuals with far less bargaining power are too often hit with the full list price.

Though hospitals claim many of those bills are written off as charity or uncompensated care, many patients end up hounded by hospitals or bill collectors, a major reason why medical bills account for more than half of all personal bankruptcies. News reports of patients socked with $50,000 or $100,000 hospital bills have become distressingly common.

“Hospitals should be providers of care, not loan sharks,” said Burger. “But we also know that price gouging is widespread throughout the health care industry, and that is a symbol of what is wrong with our profit-focused healthcare system, and why we need real reform.”

“Effective reforms would include a crackdown on inflated charges as well as greater public oversight and protection generally. Ultimately, the only long term solution is still the transformation of our broken healthcare system to a more humane system, such as in expanding and improving Medicare to cover everyone,” Burger said.

###