Blog & Reviews

For-Profit Health Care Business Practices Gouge Emergency Room Patients

Jun 6, 2017 | Blog | 0 comments

A recent study published in JAMA documents what emergency patients, particularly those without insurance, have long experienced:  medical care in the emergency department is very expensive.  Here is the concluding statement from the article:

Results  Our analysis included 12 337 emergency medicine physicians from 2707 hospitals and 57 607 internal medicine physicians from 3669 hospitals in all 50 states. Services provided by emergency medicine physicians had an overall markup ratio of 4.4 (340% excess charges), which was greater than the markup ratio of 2.1 (110% excess charges) for all services performed by internal medicine physicians. Markup ratios for all ED services ranged by hospital from 1.0 to 12.6 (median, 4.2; interquartile range [IQR], 3.3-5.8); markup ratios for all internal medicine services ranged by hospital from 1.0 to 14.1 (median, 2.0; IQR, 1.7-2.5). The median markup ratio by hospital for ED evaluation and management procedure codes varied between 4.0 and 5.0. Among the most common ED services, laceration repair had the highest median markup ratio (7.0); emergency medicine physician review of a head computed tomographic scan had the greatest interhospital variation (range, 1.6-27.7). Across hospitals, markups in the ED were often substantially higher than those in the internal medicine department for the same services. Higher ED markup ratios were associated with hospital for-profit ownership (median, 5.7; IQR, 4.0-7.1), a greater percentage of uninsured patients seen (median, 5.0; IQR, 3.5-6.7 for ≥20% uninsured), and location (median, 5.3; IQR, 3.8-6.8 for the southeastern United States).

For-profit hospitals generally marked up the cost for emergency room care significantly more than not-for-profit hospitals.  Mark-ups in hospital cost do not reflect the real cost of care provided.  Rather, billed charges generated by hospitals, which are a closely guarded trade secret, are created as a starting point in bargaining with payers.  Payers, such as Medicare, are able to induce substantial reductions in the actual cost of hospital care.  Medicare does not allow balance billing, meaning that patients with Medicare can not be required to pay the remainder of the hospital’s charges after the negotiated rate is paid by Medicare.  Most insurance companies negotiate similar reductions in cost for their members, though usually not achieving the same cost reduction given to Medicare.  ER patients with no health insurance or government payer often are billed the hospital charge rate, which can be 12 times higher than what Medicare pays.  This higher rate can be balance-billed to ER patients with insurance who happen to be brought to an emergency room that is out of the network for their insurance company.

A single payer health care system entirely eliminates these problems.