Hospital price mark-ups for elective surgery: 7 things to know

Hospitals that charge patients and insurers the highest markups for common surgeries also tend to deliver worse outcomes, according to new research published in JAMA Surgery.

The study analyzed data from nearly 2,000 U.S. hospitals and found that those with the highest markups — often for-profit and urban — had significantly higher rates of complications and readmissions. Researchers analyzed 1,960 hospitals using 2022 data from the Nationwide Readmissions Database. A total of 362,367 patients were included in the study, with 42,620 (11.8%) treated at high-markup hospitals.

Here are seven key findings from the study:

1. Top 10% of hospitals charged up to 17 times their cost of care. The study found approximately 10% of hospitals — defined as high-markup hospitals — charged a median of 8.5 times the actual cost of elective surgeries. The top 50 hospitals had a median markup of 13, and some charged up to 17 times true costs.

2. High-markup hospitals were mostly for-profit and urban. These hospitals were more likely to be investor-owned, for-profit institutions located in large metropolitan areas.

3. Higher prices were not linked to higher quality. Despite significantly higher charges, patients treated at high-markup hospitals did not experience better outcomes. In fact, they had worse outcomes compared to those treated at lower-markup hospitals.

4. Patients faced a higher risk of complications and readmissions. After risk adjustment, patients treated at high-markup hospitals had 45% greater odds of major complications — including cardiac, respiratory, infectious, and kidney events — and a 33% higher risk of readmission within 30 days, according to a report from UCLA Health, where one of the lead authors works.

5. Pricing data was directly linked to clinical outcomes. Lead author Dr. Sara Sakowitz said the study is one of the first to connect hospital price markups to risk-adjusted patient outcomes. “The most expensive hospitals were frequently the lowest-value hospitals,” she said.

6. Patients bear the cost of excessive pricing. Dr. Sakowitz noted that inflated hospital prices affect patients, families, employers, and taxpayers. High charges can lead to increased premiums, deductibles, and in some cases, financial toxicity or medical bankruptcy.

7. Policy solutions may include transparency and regulation. The researchers called for standardized public reporting of hospital markup data tied to outcomes. Currently, only Maryland and West Virginia regulate hospital pricing.

“Requiring public, standardized reporting of hospital markups and linking those reports to outcomes would be a first step,” said Dr. Sakowitz. “Ultimately, this is about building a health care system that is fairer, safer, and more accountable to the people it serves.”

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