WASHINGTON – Today, in response to an alarming new study that appeared in Health Affairs, U.S. Senator Chris Murphy (D-Conn.), a member of the U.S. Senate Health, Education, Labor, and Pensions Committee, called on the Chief Executive Officers (CEOs) of the 50 U.S. hospitals with the highest markups to immediately institute more reasonable charges for their patients. In a letter addressed to the hospitals’ CEOs and the CEOs of the hospitals’ parent companies, Murphy stressed that these 50 hospitals have unjustifiably inflated their prices by more than one thousand percent above the Medicare-allowable cost for their most vulnerable, low or no income patients. Murphy also raised important questions about the potential pricing abuses within investor-owned hospitals and within certain hospital systems, citing that 49 of these 50 hospitals are for-profit institutions, and that 39 of these 50 hospitals are owned by just two investor-owned operators. 

“I write today with serious concerns about an alarming new study regarding the incredibly high markup that your hospital has been charging vulnerable patients, including the uninsured. Your hospital inflated prices for some of the most vulnerable patients by more than one thousand percent above the price you get paid by Medicare. Given that uninsured patients are normally of low or no income, this practice seems particularly outrageous and immoral. I understand that the health care industry is changing as reimbursements shift towards value-based care instead of volume, but this defies logic. I urge you to immediately rectify the situation by instituting reasonable charges for these patients,” Murphy wrote. 

Click here to view the full list of the 50 hospitals with the highest charge-to-cost ratios.  

Click here to view the full text of the letter. The full text of the letter is also written below: 

Dear [CEO]:

I write today with serious concerns about an alarming new study that appeared in Health Affairs regarding the incredibly high markup that your hospital [or hospital system] has been charging vulnerable patients, including the uninsured. Specifically, the study found that the average charge-to-cost ratio for the top 50 hospitals in 2012 was 10.1 times the Medicare-allowable cost. Put another way, these hospitals, including yours, inflated prices for some of the most vulnerable patients by more than one thousand percent above the price you get paid by Medicare. Given that uninsured patients are normally of low or no income, this practice seems particularly outrageous and immoral. I urge you to take steps to immediately correct this situation.

The study also raises important questions about the different pricing practices at investor-owned hospitals and non-profit hospitals. Of the top 50 hospitals with the highest charge-to-cost ratio, an astounding 49 were for-profit entities. Moreover, the study seems to point out potential pricing abuses within certain hospital systems. An astounding 78 percent of the top 50 hospitals were from two investor-owned operators – Community Health Services, which accounted for half of the top 50 hospitals, and Hospital Corporation of America, which had 14 hospitals in the top 50.

Proponents of for-profit health care often state that profit motivations do not factor into the quality or cost of care provided to patients. However, this study provides clear evidence to the contrary. In fact, it is merely the latest example of troubling research on differences between not-for-profit and for-profit hospitals. Earlier research showed that for-profit hospitals are more likely to offer financially profitable services and more responsive to rapid changes in profitability of services.

Additionally, the hospitals were concentrated in states with high rates of for-profit health care providers, such as Florida, which accounted for 40 percent of the hospitals examined. A study released by my office in 2014 found that the top 10 states dominated by for-profit hospitals spent approximately 3 percent more per enrollee than the top non-profit states.

I understand that the health care industry is changing as reimbursements shift towards value-based care instead of volume, but charging a one thousand percent markup to some of the most vulnerable patients defies logic. Simply put, how can your hospital justify charging rates so high when other hospitals offer charity care but have lower markups? Again, I urge you to immediately rectify the situation by instituting reasonable charges for these patients. Thank you in advance for your consideration and I look forward to your response.

Sincerely,

Christopher S. Murphy
United States Senator