Gundersen, Mayo Charge Double Cost of Care

By Eric Timmons

Gundersen and Mayo both charge patients more than double the cost of care, according to a new study by National Nurses United.

The study found that Gundersen charges an average of $251 for every $100 of the cost to provide care at its La Crosse hospital, while Mayo charges an average of $215 for every $100 of costs across its system. Both are below the average $279 charged for $100 of costs for hospitals in Wisconsin, the study found. Nationally, U.S. hospitals charge an average of $417 for every $100 of costs, a markup that has more than doubled over the past 20 years. Rapidly rising hospital charges are a major reason behind the extraordinarily high cost of health care in the U.S., which prices many out of the system.

“There is no excuse for these scandalous prices. These are not markups for luxury condo views, they are for the most basic necessity of your life: your health,” said Jean Ross, president of National Nurses United (NNU), the largest union of registered nurses in the country. The study was released this month and is based on Medicare cost reports for 4,203 hospitals in fiscal year 2018, the most recent data available. 

“Unpayable charges are a calamity for our patients, too many of whom avoid — at great risk to their health — the medical care they need due to the high cost, or they become burdened by devastating debt, hounded by bill collectors or driven into bankruptcy,” Ross said.

The report comes as the two big local health care providers revealed the latest round of price increases at their hospitals. Gundersen recently announced a 4.5% increase in “patient revenue” starting Jan. 1, while Mayo revealed its rates would rise by an average of 2.75% for its La Crosse hospital. The increase means that room and board plus nursing care for a night in intensive care at Gundersen will rise from $3,025 to $3,161, according to a legal notice. The cost for the same service at Mayo will increase from $3,374 to $3,408. A statement from Mayo said the price increases would allow it to continue to “keep pace with the increasing cost of providing care with below-cost reimbursement from government programs.” Similarly, Gundersen laid much of the responsibility for its price hikes on the government, noting that “increasingly inadequate reimbursement from Medicare and Medicaid programs is a significant factor in the hospital’s need to increase prices on the private sector.”

The prices published by hospitals may not be what ends up being charged to an insurer that can bargain with providers. A 2017 study found that for each dollar increase in list price, insurers paid an additional 15 cents to hospitals. When insurers pay more, their cost is typically passed along to employers, their employees or individual patients in higher premiums, deductibles, and co-pays. Negotiations between insurers and hospitals are confidential, the report notes.

Higher Prices Fuel Medical Debt

The uninsured have the least negotiating power when asked to pay full price and regularly struggle to do so. This is one reason why medical bills are often resolved through medical debt lawsuits. Once the hospitals win a favorable court judgment, they often file liens against patients’ homes, or garnish their bank accounts or wages. 

Public court records show that Gundersen took 326 cases to court in La Crosse County alone in 2018 to recoup $721,000 in medical debt, and Mayo also took dozens of cases to court locally that year. In many of those cases, wages from those being sued were garnished to recoup the debt.

Medical debt is common in the U.S., unlike in other wealthy nations that typically have some form of universal health care. The NNU report noted that in Maryland, one of few states to make the data publicly accessible, hospitals have filed more than 145,000 medical debt lawsuits over the last 10 years, seeking $268.7 million in payments from patients.

In Wisconsin, the hospital with the highest charge-to-cost ratio in the report was the Aurora Medical Center in Kenosha, which charged $507 for every $100 of their costs. Overall, the 100 most expensive U.S. hospitals charge from $1,129 to $1,808 for every $100 of their costs. The top three highest charge-to-cost ratios were all found at for-profit hospitals in Florida. According to the study, hospitals’ costs include not only the cost of direct labor and supplies provided to patients, but also non-care costs, such as administration, housekeeping, and other general costs.

Pushed upward by increasing charges, hospital profits have grown by 411% since 1999 to a record $88 billion in 2017, the report found. Gundersen’s revenues were $117 million greater than its expenses at its La Crosse hospital in 2018, the most recent year for which public records are available. Mayo Clinic, across its much larger system, reported net income of $1 billion in 2019. Both health systems are nonprofits.

The rise in hospital charges also coincides with growing hospital mergers and acquisitions by large systems. According to the NNU study, the result is increased market consolidation, which leads to higher profits and increased charges rather than savings for patients as hospital systems often claim.

Medicare’s Bargaining Power

Medicare is the most effective system at limiting rising hospital prices through its bulk purchasing power to set the price it will pay, the NNU report states. “The most viable solution to slowing the growth in hospital charges and the continued inflation of hospital prices, is to bring all health care purchasers together, under a public, nationwide single-payer plan,” the report notes.

“Nurses know that the best way to rein in these outrageous charges that create such grievous harm for our patients is with Medicare for All, as other countries have proven,” said Ross, the NNU president. “Medicare for All will not only guarantee health care coverage for every person in the United States, it will end medical bankruptcies, medical debt lawsuits, and the health insecurity faced by millions who make painful choices every day about whether to seek the care they desperately need.”

Last year, 137 million people in the United States reported struggling with medical debt. A 2018 survey found that 44% skipped medical care due to the cost while 30% said they had to choose between paying for medical bills or basic necessities like food or housing. However, although the U.S. far exceeds the rest of the world in per capita health care costs, it lags behind many other wealthy countries in a variety of health outcomes. 

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