Murphy hits for-profit hospitals

Senator says gouging of uninsured ‘outrageous and immoral’ practice

By:  Don Michal
Journal Inquirer

U.S. Sen. Christopher S. Murphy is asking the top executives at the 50 U.S. hospitals with the highest markups for uninsured patients to institute “more reasonable” charges immediately.

The Democrat from Cheshire also says that since all but one of those hospitals — or the hospital chains that own them — are for-profit institutions, their practice of inflating charges “raises important questions” about the different pricing practices at investor-owned hospitals and nonprofit hospitals.

Murphy, who serves on the Senate’s Health, Education, Labor, and Pensions Committee, made his comments in a letter he sent Monday to the chief executive officers at the 50 hospitals or their corporate parents.

That group included four hospitals in Alabama, California, and Pennsylvania owned by Tenet Healthcare Corp., the Texas-based for-profit that last year walked away from deals to buy the nonprofit Eastern Connecticut Health Network’s Manchester Memorial and Rockville General hospitals, as well as three others in Waterbury and Bristol.

ECHN and the Greater Waterbury Health Network now are targeted for takeover by the for-profit operator of a much smaller hospital chain, Prospect Medical Holdings, a corporate buyout firm based in California.
Murphy told the hospital executives that he was reacting to an “alarming” study by a peer-reviewed publication, Health Affairs, which recently found that the average charge-to-cost ratio at the top 50 hospitals in 2012 was 10.1 times the cost allowed under Medicare.

“Put another way, these hospitals, including yours, inflated prices for some of the most vulnerable patients by more than 1,000 percent above the price you get paid by Medicare,” he wrote. “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 toward value-based care instead of volume, but charging a 1,000 percent markup to some of the most vulnerable patients defies logic,” he continued. “Simply put, how can your hospital justify charging rates so high when other hospitals offer charity care but have lower markups?”

Murphy also wrote that “an astounding 49” of the 50 hospitals were for-profit entities and that the study “seems to point out potential pricing abuses within certain hospital systems.”

He added that more than three-quarters of the top hospitals were owned or operated by only two investor-owned operators, Community Health Services, which accounted for half of 50 facilities, and Hospital Corporation of America, which accounted for 14.

“Proponents of for-profit health care often state that profit motivations do not factor into the quality or cost of care provided to patients,” the senator wrote. “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 are more responsive to rapid changes in profitability of services.”