Most High-Priced Hospitals For-Profits
A new study in the journal Health Affairs discovered that the vast majority of hospitals in the United States with the highest markups in comparison to allowable Medicare charges are for-profit facilities.
According to the study, which was conducted by researchers at Washington and Lee University and the Johns Hopkins University of Public Health, 98% of hospitals, or 49 out of 50, operate as for-profits and are operated by just two hospital chains. Community Health Systems owns fully half of the hospitals on the list, while Hospital Corp. of America owns 14 others, accounting for 28 percent of the total. Forty percent of the hospitals are in Florida.
On average, the study found that the priciest hospitals billed on average 10 times Medicare allowable charges. That’s nearly triple the current nationwide average of about 3.4 times Medicare allowable charges
California is home to just three of the hospitals on the list. The study’s authors noted that the state’s Hospital Fair Pricing Act requires patients with incomes below 350% of the federal poverty level to pay no more than Medicare rates.
As a result of the law, the study noted that many hospitals in California charge within 90% of allowable medical charges and not multiples.
All three high-priced California facilities are owned by for-profits.
Olympia Medical Center in Los Angeles is owned by Alecto Healthcare Services. The Irvine-based hospital chain was formed by former Prime Healthcare Chief Executive Officer Lex Reddy almost immediately after resigning abruptly from the company in 2012 amid allegations its hospitals had been billing Medicare for exotic but pricey medical conditions. Alecto includes several former senior level Prime executives in its management ranks.
Alecto appears to be replicating the Prime model of acquiring financially distressed hospitals and turning around their operations.
In addition to Olympia, Alecto owns St. Rose Hospital in Hayward and hospitals in Wes Virginia and Texas.
Dallas-based Tenet Health Corp., which for years was based in Santa Monica and Los Angeles, owns Doctors Medical Center of Modesto and Doctors Hospital of Manteca, both are within 10 miles of each other in the northern San Joaquin Valley.
