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US hospitals mark up prices more than 20-fold to maximize revenue, study suggests

BMJ 2016; 354 doi: https://doi.org/10.1136/bmj.i5015 (Published 15 September 2016) Cite this as: BMJ 2016;354:i5015
  1. Michael McCarthy
  1. Seattle

US hospitals mark up prices on some services by more than 20-fold, strategically using the markups to maximize their revenue, a study has found.1

The researchers analyzed data from the “chargemasters” of more than 2400 hospitals across the country. These records list the prices hospitals set for services before discounts. Chargemaster prices are typically considerably higher than the actual costs to the hospital.

Hospital executives said that chargemaster prices were largely irrelevant to patients because the actual prices paid by customers were steeply discounted in negotiations with both commercial and public payers. However, patients without insurance, …

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