The for-profit hospital industry based in Nashville finds itself among the most expensive health care systems in the country. That’s according to a new study from the RAND Corporation, though the hospital companies quibble with the conclusions.
RAND researchers collected data that the public usually doesn’t get to see — the difference between what Medicare pays for certain services and what the same hospital charges private insurers. At the high end, they’re charging four or five times more than they get from the government, which is typically the same across the country.
The most expensive hospital system is Quorum Health, based in Brentwood. Private insurers and patients paid 438% more than Medicare rates,
according to RAND data. Following closely behind is Lifepoint at No. 3 in the country, Community Health Systems at No. 10 and HCA at No. 11, taking in 300% more from private insurers than the government.
“The question is why,” says Kathy Hempstead, senior policy advisor at the Robert Wood Johnson Foundation, which funded the study. “And usually the answer is that they have some kind of market power.”
Some Nashville-based chains like Quorum and Lifepoint operate rural hospitals that are often the only one in town.
Community Health try to own multiple hospitals in the same community. Both scenarios provide negotiating power with private insurers who have little choice but to cover their hospitals.
“The fact that a for-profit institution is charging higher prices may say more about whether they tend to concentrate in certain markets, and therefore have greater leverage in those markets than do their nonprofit sister institutions,” says David Blumenthal, president of The Commonwealth Fund.
For their part, the hospital systems dispute some of the findings. Quorum argues the data is incomplete and potentially misleading, since it covers only a third of American hospitals.
Quorum, which owns 26 hospitals and has been selling off facilities to pay down debt, says its internal data reflects payments that are 30% to 50% lower than what’s reflected in the report.
“We firmly believe our hospitals play a crucial role in the healthcare continuum of the communities they serve,” the company says in a statement. “We’re committed to keeping our hospitals financially strong and viable for their communities in the long term.”
The American Hospital Association has
also questioned the methodology and the use of Medicare as a benchmark. Many hospitals say, while Medicare pays more than Medicaid, it still doesn’t always cover the full cost of care.
Hospitals also point out that they have to make up for all of the bills that go unpaid by those who are uninsured.
But the systems say they support price transparency efforts meant to drive down the cost of health care. Community Health Systems points to an increase in visits to its walk-in clinics and primary care practices.
“Hospitals affiliated with Community Health Systems work with their patients to help them understand the cost of their care and also have implemented strategies that help patients to receive care appropriate for their needs in a lower-cost setting,” the company says in a statement.