Updated Jul 25, 2018

Think drug costs are bad? Try hospital prices

Data: Centers for Medicare & Medicaid Services; Chart: Kerrie Vila/Axios

Several pharmaceutical companies have recently said they'll delay some of their price increases, under pressure from the Trump administration. But hospitals have made no such concessions, even though they make up a much larger share of total health care spending.

The bottom line: Axios reached out to 27 hospital systems, many of which have some of the highest charges in the country. All of them were silent about whether they would lower or hold off on price increases.

Driving the news: Pfizer, Novartis, Merck and other drug makers have said they will delay, freeze or roll back price increases on some of their medicines.

  • Experts largely dismissed those pledges as political bandages with little real effect on patients' pocketbooks. But President Trump's ability to publicly pressure drugmakers into even those steps is still noteworthy.

The big picture: Drug pricing is the political controversy of the moment, but hospitals cost the health care system far more.

  • Retail drug spending represents 10% of U.S. health care spending, while hospital and doctor services consume about half of spending.
  • Health care prices have grown somewhat slowly over the past few years. But slow growth of high prices still leaves high prices.
  • Hospitals' sticker prices, like the list prices of drugs, are not indicative of what most people pay, but they are still important when it comes to negotiating with commercial health insurers.
  • A major difference worth highlighting is that Medicare sets its own fixed payment rates for hospital services, but does not have that power over prescription drugs.

What we're hearing: Almost nothing from the hospital industry.

Axios reached out to 27 hospital systems that have some of the highest charges in the country, according to federal data. None said they would follow drug companies' symbolic gestures and delay, freeze or lower their prices.

  • Ed Fishbough, a spokesperson at for-profit chain HCA Healthcare, said hospital pricing has been under pressure. Over the past five years, the company's prices have "increased an average of approximately 2.5% annually."
  • Sutter Health has limited its price hikes to "less than 3% annually since 2012," said Karen Garner, a spokesperson for the California system, who then argued "some insurance companies increased their rates to consumers by as much as 20% in a single year."
  • Terry Lynam, a spokesperson for Northwell Health in New York, said Northwell and most other systems have "extremely narrow margins ... unlike pharmaceutical companies," and that Northwell is "always looking for ways of reducing the cost of care."
  • 24 hospital systems either declined to comment or did not respond after multiple requests: Ascension, Bon Secours Health System, Catholic Health Initiatives, Cedars-Sinai, Cleveland Clinic, Community Health Systems, Dignity Health, Florida Hospital, Hospital for Special Surgery, Keck Medicine of USC, LifePoint Health, MedStar Health, Mercy Health, NewYork-Presbyterian, Northwestern Memorial HealthCare, NYU Langone Health, Partners HealthCare, Stanford Health Care, Tampa General Hospital, Temple University Health System, Tenet Healthcare, UPMC, Westchester Medical Center Health Network and Yale New Haven Health.

Go deeper

The health care debate we ought to be having

Photo Illustration: Sarah Grillo/Axios. Photos: Scott Eisen/Getty Images and Erik McGregor/LightRocket via Getty Images

Americans worry a lot about how to get and pay for good health care, but the 2020 presidential candidates are barely talking about what's at the root of these problems: Almost every incentive in the U.S. health care system is broken.

Why it matters: President Trump and most of the Democratic field are minimizing the hard conversations with voters about why health care eats up so much of each paycheck and what it would really take to change things.

Hospitals say they want affordable care, but actions aren't clear

Illustration: Aïda Amer/Axios

Hospitals acknowledged to investors at this year's J.P. Morgan Healthcare Conference that their industry is contributing to patients' financial turmoil.

Yes, but: Hospitals reassured those same investors that they were focused on growing their revenue, with no real details about how that would save patients money.

Go deeperArrowJan 14, 2020

A new effort to cut hospital costs

Illustration: Aïda Amer/Axios

A billionaire with an interest in health care, state legislatures and a well-respected policy shop are all aligning in 2020 to take on hospital costs.

Driving the news: Modern Healthcare reports that the National Association for State Health Policy will be coming up with model legislation in 2020 to help states rein in hospital spending, in addition to work on drug costs.

Go deeperArrowJan 15, 2020