U.S. hospitals charge about $2.57 for every $1 they collect, and most of the patients who pay full freight are patients without health coverage.
Gerard Anderson, a professor at Johns Hopkins University, has published a paper giving that estimate in the latest issue of the journal Health Affairs.
The ratio of billed revenue to collected revenue ranges from just 2.03-to-1 at rural hospitals up to 3.26-to-1 at privately owned hospitals, Anderson reports.
In Maryland, a state that requires hospitals to charge all payers the same prices, hospitals charge only $1.23 for every dollar collected, Anderson writes.
Back in 1984, the national average ratio of “gross to net revenue” was just 1.25-to-1, Anderson writes.
Hospitals increase their “list prices” much faster than the Medicare allowable costs in an effort to increase the amount of revenue they collect from private insurers, but negotiators for private managed care plans typically drive the discounted price they pay for their patients to a level much closer to the Medicare allowable cost level, Anderson writes.
Although most of the patients who pay the full list price are uninsured, the gap between list prices and the typical prices managed care plans pay also affects insured patients who seek care out of network, including patients who belong to health savings account-compatible high-deductible plans that encourage members to negotiate their own discounts directly with providers.