Better Solutions for Healthcare

The Charlotte Observer: Prices soar as hospitals dominate cancer market

By Ames Alexander, Karen Garloch, & Joseph Neff

April 22, 2015

Large nonprofit hospitals in North Carolina are dramatically inflating prices on chemotherapy drugs at a time when they are cornering more of the market on cancer care, an investigation by the Observer and The News & Observer of Raleigh has found.

The newspapers found hospitals are routinely marking up prices on cancer drugs by two to 10 times over cost. Some markups are far higher.

It’s happening as hospitals increasingly buy the practices of independent oncologists, then charge more – sometimes much more – for the same chemotherapy in the same office.

Asked about the findings, hospital officials said they are relying on a longtime practice of charging more for some services to make up for losses in others. Hospitals have a name for this: cost-shifting.

“The drug itself may just be the vehicle for charging for the services that are provided (elsewhere),” said Joe Piemont, president of Carolinas HealthCare System, the $7 billion chain that owns many of the region’s hospitals. “We make literally thousands of trades to have it balance.”

The rising price of cancer treatment has financially devastated many families, while driving up insurance costs and causing some patients to put off needed treatments.

“If you have enough money or good enough insurance, it may not be an issue for you,” said Donna Hopkins, CEO of Dynamic Medical Solutions, a company that audits medical bills. “If you’re somebody who doesn’t have that, it can be a death sentence.”

After examining some chemotherapy bills collected by the Observer, Hopkins called the markups “outrageous.”

Some of the largest markups are made by nonprofit hospital chains that generate millions of dollars of profit each year and have billions in reserves.

It’s a mystery to the public how hospitals set their charges. But the newspapers obtained and analyzed a private database with information on more than 5,000 chemotherapy claims to get insight into pricing for cancer patients, a group that faces some of the nation’s highest medical bills….