The latest national evidence finds that high-markup hospitals routinely charge patients many times their costs—up to 17x—and deliver worse outcomes. These high-markup hospitals are disproportionately for-profit, clustered in large metropolitan markets, and associated with significantly higher rates of major complications and 30-day readmissions after major elective surgery. The findings sharpen a long-running policy debate: when hospitals hike list prices far above costs and quality lags, the highest-priced care often represents the lowest value for patients and purchasers.

Key Takeaways

– shows about 10% of U.S. hospitals qualify as high-markup, with median 8.5-fold charges and top 50 at a 13x median. – reveals investor-owned facilities charge up to 17 times costs, while others average roughly threefold—an extreme pricing spread harming patients. – demonstrates 45% greater odds of major complications and 33% higher 30-day readmissions for patients treated at high-markup hospitals. – indicates 196 high-markup hospitals treated 42,620 of 362,367 patients (11.8%), skewed toward large metros and overwhelmingly for-profit ownership. – suggests transparency mandates and targeted regulation could reduce excessive charge-to-cost ratios and improve value by penalizing low-quality, high-markup hospitals.

How researchers identified high-markup hospitals

A national cross-sectional analysis in JAMA Surgery examined 1,960 hospitals using the 2022 Nationwide Readmissions Database, identifying roughly 10% as high-markup with a median 8.5-fold charge-to-cost ratio and a top-50 median of 13 [1].

For patients undergoing major elective operations, high-markup care correlated with adjusted odds ratios of 1.45 for major morbidity and 1.33 for 30-day readmission. Researchers measured outcomes using standard risk adjustment to control for patient characteristics, capturing complications across cardiac, pulmonary, infectious, and renal domains. The analytic window ran from September 2024 through March 2025, and the study’s design allowed hospital-level comparisons of price markups against clinical outcomes.

Price markup here reflects the hospital’s ratio of gross charges to underlying costs. While gross charges are rarely the final paid amount for in-network care, they shape out-of-network exposure, inform negotiations, and can influence patient financial liability—especially for the uninsured. The spread uncovered—a median 8.5x among high-markup hospitals, with the highest group at 13x—illustrates how far list prices can diverge from costs.

Where high-markup hospitals cluster and who owns them

A UCLA release on Sept 24, 2025 reported 196 high-markup hospitals in the cohort charging up to 17 times underlying costs among 362,367 surgical patients, with 42,620 (11.8%) treated at these facilities, which skewed toward large metros and for‑profit ownership [2].

That urban concentration matters. Large metropolitan areas often feature consolidated hospital markets with large investor-owned systems, stronger leverage over payers, and a higher likelihood of out-of-network encounters for patients navigating complex provider networks. The combination of market power and aggressive chargemasters can magnify markups, especially in service lines where patients have limited ability to shop in emergencies or for specialized procedures.

Ownership structure is a recurrent theme. For-profit status frequently aligns with higher charge-to-cost ratios, and the newest findings reinforce that pattern within the subset of high-markup hospitals. While not every investor-owned facility is high-markup, the statistical tilt toward for-profit operators in big cities helps explain both the pricing profile and the broader financial risks borne by uninsured and out-of-network patients.

Outcomes gap: complications, readmissions, and value

High-markup hospitals were associated with worse clinical results—an important signal for purchasers and patients equating price with quality. The evidence linked treatment at high-markup facilities to 45% greater odds of major complications (cardiac, respiratory, infectious, or kidney) and a 33% increase in non-elective 30-day readmissions after major elective operations [3].

The magnitude of the outcomes gap undercuts the notion that higher prices buy superior care. Instead, the data point to a negative price–value relationship: patients paid more—often multiples of cost—yet faced higher risks of serious complications and returns to the hospital within a month. That combination threatens both health and household finances, particularly when readmissions trigger new deductibles or expose patients to out-of-network billing.

Clinically, the pattern suggests system-level issues at high-markup facilities: staffing intensity, care coordination, discharge planning, and infection control all influence complications and readmissions. While the study cannot assign causality, the persistent association—after adjustment—indicates that extreme price markups do not reliably fund better outcomes, and may coexist with operational constraints or priorities unrelated to bedside quality.

What history shows: extreme markups, for-profit dominance

A decade of prior research foreshadowed this moment. A 2015 Health Affairs analysis identified the 50 highest-charging U.S. hospitals, with average markups around tenfold and peaks at 12.6x Medicare-allowable costs; tellingly, 98% were for-profit and many were concentrated in Florida [4].

That earlier work documented the mechanics: chargemasters set inflated list prices, which particularly burden uninsured patients and those caught out of network. The new national dataset on surgical outcomes extends the story from financial exposure to clinical consequence. By linking markups to morbidity and readmission risk, the latest study reframes the conversation from “expensive” to “low-value,” showing that extreme prices can coincide with inferior outcomes.

Policy playbook to rein in hospital markups

Policymakers have options that blend transparency with accountability. Public reporting of hospital charge-to-cost ratios, displayed alongside complication and readmission rates, would give purchasers and patients a clearer view of value. Caps on allowable markups relative to costs—especially for out-of-network services—could blunt the most extreme pricing. CBS News previously reported a national average markup near 3.4, compared with outliers billing up to 1,260%, underscoring headroom for targeted limits that protect the uninsured and out-of-network patients [5].

Payment reforms can align dollars with outcomes. Tying reimbursement bonuses or penalties to risk-adjusted complication and readmission rates would reward higher-value hospitals irrespective of list prices. Payers could adopt default benchmarks—such as a multiple of Medicare rates—for emergency out-of-network care, eliminating the leverage of inflated chargemasters and narrowing the negotiation gulf between high-markup facilities and insurers.

Market oversight also matters. Certificate-of-need and merger review should incorporate markup and outcomes indicators when evaluating consolidation. Where concentrated markets enable persistent extreme markups and poor outcomes, regulators could scrutinize contracting practices, require rate parity clauses, or condition approvals on measurable quality improvements. Finally, employer coalitions and state employee plans can accelerate change by steering members toward high-value networks and publishing hospital-level value scorecards that combine pricing and outcomes.

Why high-markup hospitals persist—and how to measure progress

Several forces sustain high markups: consolidation that reduces competition; chargemasters that anchor negotiations around inflated list prices; and asymmetric information that obscures value. Even when negotiated rates sit below charges, out-of-network encounters, facility fees, and surprise bills can transmit markups to patients. Because markups and outcomes vary widely within markets, transparent, comparable metrics are essential.

Measuring progress requires pairing financial and clinical indicators. Key metrics include the charge-to-cost ratio; risk-adjusted major morbidity; 30-day non-elective readmission rates; and patient financial exposure (e.g., average balance billing amounts). Tracking those measures over time—and publishing hospital-level dashboards—can verify whether policy levers and purchaser strategies are shrinking markups while improving outcomes.

Ultimately, the new research is a warning and a roadmap. If 10% of hospitals are extracting the largest markups while delivering worse results, patients and payers can respond: align incentives to reward value, standardize disclosures that expose extreme pricing, and enforce guardrails to protect those least able to bear the costs.

Sources:

[1] JAMA Surgery – Hospital Price Markup and Outcomes of Major Elective Operations: https://jamanetwork.com/journals/jamasurgery/fullarticle/10.1001/jamasurg.2025.3647

[2] UCLA Health – “High-markup” hospitals are overwhelmingly for-profit, located in large metropolitan areas and have the worst patient outcomes: www.uclahealth.org/news/release/high-markup-hospitals-are-overwhelmingly-profit-located” target=”_blank” rel=”nofollow noopener noreferrer”>https://www.uclahealth.org/news/release/high-markup-hospitals-are-overwhelmingly-profit-located [3] MedicalXpress – ‘High-markup’ hospitals charge more but have significantly worse patient outcomes, study reveals: https://medicalxpress.com/news/2025-09-high-markup-hospitals-significantly-worse.html

[4] Health Affairs (PubMed) – Extreme Markup: The Fifty US Hospitals With The Highest Charge-To-Cost Ratios: https://pubmed.ncbi.nlm.nih.gov/26056196/ [5] CBS News – 50 hospitals with markups of around 1,000 percent: www.cbsnews.com/news/50-hospitals-with-markups-of-around-1000-percent/” target=”_blank” rel=”nofollow noopener noreferrer”>https://www.cbsnews.com/news/50-hospitals-with-markups-of-around-1000-percent/

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