In a groundbreaking study soon to be published in JAMA Surgery, researchers at UCLA have unveiled a troubling relationship between the astronomical price markups of certain hospitals and the quality of care patients receive. The investigation focused on nearly 2,000 American hospitals performing four major elective surgeries: abdominal aortic aneurysm repair, colectomy, coronary artery bypass grafting, and hip replacement. Among these institutions, a significant subset – termed “high-markup hospitals” (HMHs) – charged patients and insurers as much as 17 times above the actual cost of care, dramatically exceeding the average markup of just three times that cost found in other hospitals.
These HMHs, approximately 10% of the total examined, are predominantly for-profit, investor-owned facilities nestled in large metropolitan areas. Their pricing strategies pose far-reaching implications not only financially, burdening patients directly with inflated bills and indirectly through higher insurance premiums and deductibles, but also clinically. Counterintuitively, this study reveals that these expensive institutions deliver notably worse patient outcomes. Contrary to popular assumptions that higher cost equates to better care, patients receiving surgery at these high-cost centers face greater rates of complications and readmissions.
To rigorously assess the impact of hospital pricing on patient health, the researchers utilized the 2022 Nationwide Readmissions Database (NRD), a comprehensive and nationally representative dataset. This dataset allowed the team to link hospital charges with patient outcomes at a granular level. Of the more than 362,000 patients analyzed, over 42,000 were treated at HMHs. Crucially, patients treated at these facilities had a 45% higher likelihood of developing serious complications – including cardiac, respiratory, infectious, and kidney issues – than those at lower-markup hospitals. Furthermore, there was a 33% increased risk of non-elective hospital readmission within 30 days post-procedure.
The findings cast a harsh light on the opaque nature of hospital pricing in the United States. At present, only Maryland and West Virginia have active regulations governing hospital prices, leaving the rest of the nation’s healthcare consumers largely in the dark. The researchers highlighted the critical need for transparent, standardized reporting of hospital prices alongside patient outcomes to empower all stakeholders—patients, insurers, employers, and policymakers alike—to make informed decisions. Without such transparency, patients are effectively powerless to “shop smart” for elective surgeries, especially given that many urgent procedures allow no choice at all.
Sara Sakowitz, the study’s lead author and a surgery resident at Massachusetts General Hospital, emphasizes the broader implications of these results. “Patients trapped in systems with inflated hospital markups often suffer financial toxicity or face medical bankruptcy,” Sakowitz states. She stresses that high prices do not translate to better quality care and that the high-markup hospitals frequently deliver the lowest value. This dichotomy challenges not only assumptions about healthcare economics but also calls into question the accountability and fairness of the broader health system.
This research advances the field by linking economic data directly to clinical outcomes—an approach that has been elusive due to the fragmented and proprietary nature of hospital pricing information. The investigation was limited by the absence of granular data on negotiated insurance contracts, discount schemes, and specific hospital supply costs. This lack of comprehensive pricing transparency presents a significant barrier to fully understanding the mechanisms driving these disparities.
Another notable revelation from prior studies, echoed in this work, is the geographic clustering of the highest markup hospitals. Most of these institutions are located in the southern United States, hinting at regional systemic issues that extend beyond individual hospital business models. This regional variation underscores the necessity for policy interventions and targeted research into local healthcare market dynamics.
The researchers also point to the urgent need to delve deeper into why worse outcomes are associated with these costly centers. Hypotheses include differences in staffing ratios, resource allocation, clinical protocols, or organizational culture, but definitive answers require more extensive investigation. The complexity of these factors demands multidisciplinary approaches incorporating health economics, clinical epidemiology, and ethics.
This study is timely given the growing policy emphasis on value-based healthcare—a model that prioritizes quality, safety, and efficiency over volume and cost alone. The finding that high prices correlate to poorer clinical outcomes stands in stark contrast to the fundamental tenets of value-based care and signals a failure of current market and regulatory mechanisms. It invites serious reflection on how incentives can be better aligned to promote equitable, high-quality healthcare.
Ultimately, this report serves as a clarion call for systemic reform. By advocating for public, standardized hospital price reporting linked explicitly to outcome data, the researchers envision a healthcare system characterized by greater fairness, safety, and accountability. Such transformation requires cooperation among policymakers, health institutions, insurers, and patient advocacy groups to dismantle the entrenched inefficiencies and inequities that inflate costs without improving care quality.
In an era when healthcare expenditures are a dominant concern for economies and families alike, this study provides rigorous empirical evidence to inform public debate and policy formulation. It reveals that unchecked hospital markups inflict tangible harm on patients, challenging policymakers to prioritize price transparency and regulation as key strategies to protect consumers and improve health outcomes nationwide.
Subject of Research: People
Article Title: Hospital Price Markup and Outcomes of Major Elective Operations
News Publication Date: 24-Sep-2025
Web References: DOI 10.1001/jamasurg.2025.3647
Keywords: Health care costs, Hospitals, Health care delivery, Medical facilities, Medical economics, Insurance
