Hospitals that charge the highest markups compared to their actual costs are primarily for-profit, investor-owned institutions located in large metropolitan areas, according to new research from UCLA. These facilities, representing about 10% of nearly 2,000 hospitals studied, charged up to 17 times the cost of care, while other hospitals averaged a markup of three times their costs.
The study, published in JAMA Surgery, analyzed data from the 2022 Nationwide Readmissions Database and focused on four major elective surgeries: abdominal aortic aneurysm repair, colectomy, coronary artery bypass grafting, and hip replacement. Out of approximately 362,400 patients treated at these hospitals, about 12% received care at high-markup centers.
Lead author Dr. Sara Sakowitz, a surgery resident at Massachusetts General Hospital and researcher affiliated with UCLA, stated: “Hospital prices affect everyone: patients, families, employers, taxpayers, and government programs, and when hospitals charge excessively, these costs ripple across the health system. Patients may be stuck with high out-of-pocket bills, sometimes leading to financial toxicity or even medical bankruptcy. For those with insurance, inflated prices translate into higher monthly premiums and deductibles, which affect families, employers, and taxpayers alike.”
The research found that higher hospital prices did not result in better patient outcomes. Instead: “In fact, patients at the highest markup hospitals faced greater complications and readmission rates. This raises concerns about fairness, transparency, and accountability in the health care system, particularly in the current era of value-based care,” Sakowitz said.
Patients treated at high-markup hospitals had about a 45% higher chance of experiencing cardiac, respiratory, infectious or kidney complications. They also had a 33% greater risk of being readmitted within 30 days for non-elective reasons.
Sakowitz highlighted the significance of linking pricing data to patient outcomes: “Patients treated at these high-markup hospitals didn’t experience better outcomes; in fact they often did worse,” she said. “In other words: the most expensive hospitals were frequently the lowest-value hospitals.”
The study acknowledged several limitations. The researchers could not access comprehensive hospital pricing lists or details on negotiated agreements between providers and insurers. They also lacked information on geographic variation beyond previous studies showing that most high-markup hospitals are located in southern states. Additionally, there was no data available on fixed or outpatient costs.
Sakowitz called for more research into why patient outcomes are worse at high-markup facilities and advocated for policy changes around price transparency and regulation. Only Maryland and West Virginia currently regulate hospital pricing.
“Patients rarely know what a surgery will cost ahead of time nor do they have the tools to compare hospitals on both price and quality,” she said. “And in urgent situations they often don’t have a choice of hospital at all. That means it’s not realistic or fair to expect patients to ‘shop smart’ for surgery in a system that lacks transparency.
“Requiring public standardized reporting of hospital markups and linking those reports to outcomes would be a first step. Ultimately this is about building a health care system that is fairer safer and more accountable to the people it serves.”
Co-authors include Dr. Syed Shahyan Bakhtiyar (also affiliated with University of Utah), Dr. Yas Sanaiha, Dr. Amulya Vadlakonda,Troy Coaston,and Dr.Peyman Benharash—all members of UCLA’s Cardiovascular Outcomes Research Laboratories within its Department of Surgery.
