EDINBURG, RGV – South Texas Health Systems of Edinburg has landed on a list as one of 50 U.S. hospitals with the highest price markups over actual costs in a new study published in Health Affairs.
STHS was among the top four hospitals in Texas, the others being Laredo Medical Center, Grand Prairie’s Texas General Hospital and Lake Granbury Medical Center, that are accused of price gouging in a report by Dr. Ge Bai, CPA, and assistant professor at Washington and Lee University.
The report concludes the current pricing system charges the highest rates to the most vulnerable patients, often overcharging up to 1,000 percent. Hospitals are charging out-of-network patients and the uninsured, as well as auto and workers’ compensation insurers, more than 10 times the costs allowed by Medicare.
Dr. Bai says since there is no regulation of hospital fees and no market forces to compel hospitals to lower costs, they charge high prices “simply because they can.” People can’t bargain or comparative shop when they are sick, Bai said.
“So there is a big loophole in our hospital pricing system, and our policy makers need to understand that and step in using their policy tools to help regulate hospital pricing and control overall healthcare spending,” Bai said in an interview with Austin-based Texas News Service. “The hospitals are playing a price gouging game, and this price gouging will trickle down to all consumers, whether you have insurance or not.”
In a company statement, STHS says that charge-to-cost ratios referenced in the article do not represent prices paid by patients for care provided. The hospital’s internal assessments indicate that charges for STHS hospitals are comparable with in the market for like services, according to STHS statement.
“Last year, the South Texas Health System provided $385 million in uncompensated and charity care,” the statement read. “The charge-to-cost ratio for South Texas referenced in the article appears to be higher due to lower expenses or better cost control as opposed to higher prices. Notwithstanding, hospital charges do not equate to the actual amounts paid by patients.”
The statement continues:
“Patients who have insurance or are covered by a government healthcare program already have established pricing unrelated to any hospital charges. For those that are uninsured or under-insured, South Texas Health System provides substantial discounts to such patients through financial assistance policies and programs. This study omitted the discounts provided by South Texas, as well as the other hospitals listed, which would have a significant effect on the charge-to-cost ratio reported.
“South Texas Health System has served the Rio Grande Valley for 30 years and is recognized for its reputation in excellence for providing quality healthcare to people in the Rio Grande Valley. As a leading hospital system in the region, STHS offers specialized services in behavioral health, cardiovascular care, emergency medicine, neuroscience, oncology, pediatric care, women’s services and rehabilitation.”
South Texas Health Systems includes Cornerstone Regional Hospital, Edinburg Children’s Hospital, Edinburg Regional Medical Center, Edinburg Regional Rehab Center, McAllen Heart Hospital, McAllen Medical Center, South Texas Behavioral Health Center, STHS ER at Mission, and STHS ER at Weslaco.