New Paper Claims Hospital Prices Are “Bleeding Americans Dry”

A new paper from the patient advocacy group Families USA is taking aim at hospitals and health systems. The report claims that high hospital prices are “bleeding Americans dry” as these organizations become more corporatized and put profits over patients.

“This paper exposes how the corporate hospital business model has fundamentally transformed into one that favors monopolies and setting high prices at the expense of our health,” Frederick Isasi, Families USA’s executive director, said in a public statement. “It’s time for us to address these pricing abuses head on to end the high hospital costs that are endangering families’ health and economic security.”

Hospital prices have increased by as much as 31 percent since 2015 and have grown over four times faster than workers’ wages, Families USA reports in the paper citing several studies. Not only have hospital prices increased, but they also continue to vary by location. Families USA says that the price tag and variation is just another way hospitals charge whatever they want for services, rather than pricing procedures and tests based on actual cost, efficacy, and quality.

Meanwhile, hospital CEOs are being paid millions of dollars while workers face higher insurance costs. What’s more, many of the highest-paid CEOs manage non-profit hospitals, making healthcare one of the highest-paying non-profit industries in the US, according to the paper.

The paper even accused hospitals and health systems of exaggerating how much revenue they receive from value-based payment arrangements.   

“Across the nation, the vast majority of hospital payment arrangements are still anchored in fee-for-service economics,” the report states, pointing to the fact that many alternative payment models like pay-for-performance arrangements still reimburse providers using a fee-for-service model.

“Even more troubling, providers that engage in bundling often aggressively increase volume both in the Medicare and private sectors (for example, putting up billboards in their communities to advertise newly bundled knee replacement services) and have been able to easily “align” with doctors in the bundle and capture more and more market share,” the report continues.

Nearly 41 percent of healthcare payments are tied to value-based payment models, including pay-for-performance arrangements, according to the latest data from the Health Care Payment Learning & Action Network (LAN). Most of these value-based payments, however, are either tied to fee-for-service or do not include downside financial risk.

Families USA calls for a more competitive healthcare industry to make care more affordable. On their list of reforms to encourage greater competition are more price transparency requirements to unveil proprietary hospital pricing information and reformation of non-profit requirements to ensure non-profit hospitals are not making “undue revenue” as patients in their communities struggle to afford care.

The paper also recommends establishing a hospital global budget payment model and cost containment commissions so hospitals are held accountable for cutting costs and improving population health outcomes.

“We must build the consumer movement around these policy solutions to ensure that consumers, employers, workers, health equity leaders and others are coming together as a counterweight to the entrenched business interests and political influence of the hospital industry,” the paper states.

 Hospital groups were not immediately available for comment.