New report shows hospitals charge more than needed to cover patient care, hospital operations

PORTLAND, Ore. — Health care costs continue to rise, increasing the burden on consumers. A new report that OSPIRG released Monday shows that Oregon hospitals in 2018 and 2019 charged commercial payers far more than what was needed to cover hospital expenses. The report, How to Curb Health Care Spending: Better align what hospitals charge commercially insured patients with hospitals’ expenses, digs into the difference between the cost of care and hospital operations, and what hospitals charge patients. 

In 2019, 51 out of 55 reviewed Oregon hospitals charged commercially insured patients prices higher than break-even levels (the amount needed to cover the cost of care and other expenses). Among these hospitals, the median charge was 60% more than their break-even amount. Those 51 hospitals also had a median operating profit margin of 17%.

“Oregon has set its sights on health care cost containment. If we’re going to get costs down and keep them there, hospital bills have to come more in line with hospital expenses,” said OSPIRG High Value Health Care Advocate Maribeth Guarino. “The data in this report gives commercial insurers leverage to negotiate lower rates and keep charges down for everyone.”

The report’s top-line findings include:

• In 2019, the 51 Oregon hospitals receiving commercial payments above their break-even amounts had a collective operating profit of $2.2 billion.
• Salem Hospital charged more than double its break-even amount in 2019. Similarly high commercial payments were found to hospitals throughout the Willamette Valley, from McMinnville to Cottage Grove.
• Hospitals received payments from commercial health insurance companies above their break-even amount regardless of hospital size, location or ownership. 

“During my daughter’s diagnosis for a severe form of scoliosis, we easily spent $2,000 on medical bills from the hospital and orthotic bracing center for MRIs, x-rays, and medical equipment, on top of the nearly $4,000 to cover her surgery,” said Kara Perry, a single mother from Portland with 2 children. “It was impossible for me to balance the high and unpredictable cost of seeking care for my then 11-year-old while I was watching her rapidly lose her ability to walk.”

How to Curb Health Care Spending also recommends reforms that could help lower the cost of care for people such as Kara, including full implementation of the state’s health care cost growth target. It also recommends adopting a Basic Health Plan to extend low-cost health insurance coverage to a broad population of Oregonians.

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