High-markup Hospitals Have Worse Patient Outcomes Despite Higher Charges

Recent research from UCLA has shed light on the troubling correlation between hospital pricing strategies and patient health results. The study highlights that hospitals charging significantly higher prices for services—particularly for-profit and investor-owned institutions located in major metropolitan areas—tend to have considerably poorer patient outcomes compared to lower-cost hospitals. These high-markup hospitals, which mark up charges up to 17 times their actual costs, make up about 10% of hospitals examined in the study.

The research, published in JAMA Surgery, analyzed data from nearly 2,000 U.S. hospitals performing major elective surgeries such as abdominal aortic aneurysm repair, colectomy, coronary artery bypass grafting, and hip replacement. Out of these, 196 hospitals were classified as high-markup, serving approximately 42,600 patients.

Patients treated at these high-markup facilities faced increased risks: they had a 45% higher chance of developing complications like cardiac, respiratory, infectious, or kidney issues, and a 33% greater likelihood of readmission within 30 days for non-elective reasons. Contrary to expectations, paying more did not translate into better care or outcomes—in fact, the data indicates worse results at these costly centers.

Dr. Sara Sakowitz, the lead researcher, emphasized that hospital prices impact everyone—patients, families, taxpayers, and health systems—especially when excessively high charges generate financial strain, including higher insurance premiums, deductibles, and potential medical bankruptcy. Transparency in pricing and outcomes is lacking, making it difficult for patients to make informed choices or for policymakers to regulate effectively.

The study underscores the need for increased price transparency, standardized reporting of hospital markups, and regulations—currently only in place in Maryland and West Virginia. Improving transparency would help patients understand costs upfront and enable comparisons of hospital quality and price. Ultimately, building a fairer, safer, and more accountable healthcare system requires addressing these disparities and ensuring that higher prices correlate with better outcomes.

source: https://medicalxpress.com/news/2025-09-high-markup-hospitals-significantly-worse.html