Press Release: Study Shows Minnesota Hospital Prices Rising Faster than Economy

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(St. Paul) – March 6, 2019 –  An analysis of hospital prices shows Minnesota hospitals are charging an average of 212 percent more than it costs them to care for patients, according to the study by National Nurses United and the Minnesota Nurses Association.  The study also shows that hospital prices have risen threefold over 20 years when compared to other goods and services in the consumer price index.

“By looking at what it costs to care for patients and comparing that to what hospitals actually charge patients, it shows that hospital prices haven’t just gone up exponentially,” said Tara Fugate, researcher for the Minnesota Nurses Association, “They’ve gone up faster than the prices of other goods and services in the economy.”

The study compares chargemaster prices for 111 acute-care facilities in Minnesota with the costs for care for each hospital as listed in the Medicare Cost Reports (MCR).  That comparison yields a formula, which is known as the Charge-to-Cost Ratio (CCR).  Hospitals in Minnesota varied widely.  The lowest priced their care at just 108 percent of costs, and the highest set their prices at 383 percent more than care costs.

“The discrepancy is startling,” Fugate said.  “And the location of the lowest-priced hospitals versus the highest-priced is notable as well.  Hospitals that tended to charge more were in Metro areas, such as the Twin Cities and Duluth, and they also were part of a corporate giant, such as Fairview, HealthPartners, and Allina.”

Those hospitals with higher CCRs also tended to bring in more revenue than the lowest-charging facilities.  As the CCR has gone up, so have patients’ bills.  The study shows that health expenditures have risen steadily over the past 20 years as part of Minnesota’s Gross Domestic Product, and hospital services are the biggest driver of those healthcare costs.

What’s more, the study aggregates Minnesota hospitals’ net profits over the same 20-year period.  Hospital net revenue, as a whole, has risen almost steadily from $395 million in 1997 to $1.3 billion in 2015.

“The figures show Minnesota hospitals have shifted their focus from patient care to making money for the sake of increasing profits,” Fugate said.

The entire report is downloadable here:  https://mnnurses.org/issues-advocacy/issues/minnesotas-most-and-least-expensive-hospitals/