34.03 The Cost of Surgical Care: How Much Are We Really Charging?

Posted on January 18, 2016

F. Gani1, M. A. Makary1, T. M. Pawlik1 1Johns Hopkins University School Of Medicine,Surgery,Baltimore, MD, USA

Introduction: Hospital markups (ratios of charges-to-Medicare-allowable costs) are not subject to regulation in most states, yet contribute to increasing insurance premiums as well as rising health-care spending. We sought to characterize national variations in hospital markup for major cardio-thoracic (CT) and hepato-pancreatico-biliary-gastrointestinal (HPB-GI) surgical procedures, as well as examine perioperative outcomes at hospitals with extreme markup.

Methods: All hospitals in which a patient underwent a CT (n=577,275) or HPB-GI (n=618,700) procedure were identified using the Nationwide Inpatient Sample (NIS) for 2012. Charge-to-cost ratios(CCR) were compared across hospitals. In-hospital outcomes were examined relative to ‘extreme markup'(≥75th percentile).

Results: Among the 17,490 hospitals identified, median CCR was 2.8 (IQR 2.7-3.9). 4,373 hospitals that treated 411,540 patients were in the highest CCR quartile (range, 3.9-12.2) (Figure). While patient age, gender and insurance status were not associated with extreme markup hospitals (all p>0.05), minority patients were more likely to be treated at high CCR hospitals (non-extreme CCR: 20.3% vs. extreme CCR: 30.4%, p<0.001). Extreme markup hospitals were more often large (non-extreme CCR: 33.7% vs. extreme CCR: 46.3%), non-teaching (non-extreme CCR: 37.9% vs. extreme CCR: 56.7%), and located in the South (non-extreme CCR: 32.8% vs. extreme CCR: 45.8%, all P<0.001). Extreme mark up hospitals had higher perioperative morbidity (non-extreme CCR: 26.4% vs. extreme CCR: 32.7%), failure-to-rescue (non-extreme: 10.2% vs. extreme CCR: 12.2%) and mortality (non-extreme CCR: 3.2% vs. extreme CCR: 4.4%, all P<0.001).

Conclusions: Many patients undergo surgery at hospitals charging over 4-times Medicare-allowable cost. Extreme markup hospitals had worse perioperative outcomes than non-extreme markup hospitals. Federal regulations should consider price disclosure to regulate hospital markups.