For profit hospitals have markup ratios of about ten times Medicare allowable costs compared to a national average of 3.4 times Medicare allowable costs.

That’s according to a study released by Health Affairs.

The study of the fifty hospitals with the highest charge to cost ratios in 2012 found that 49 of the 50 are for profit and twenty of the 50 operate in Florida.

One for-profit hospital system — Community Health Systems —  owns half (25) of these fifty hospitals.

Another — Hospital Corp. of America — operates another 14.

While most public and private health insurers do not use hospital charges to set their payment rates, uninsured patients are commonly asked to pay the full charges, and out-of-network patients and casualty and workers’ compensation insurers are often expected to pay a large portion of the full charges.

Because it is difficult for patients to compare prices, market forces fail to constrain hospital charges.

While publicly insured patients typically pay comparatively close to actual cost, uninsured patients, out-of-network patients, and casualty and workers’ compensation insurers do not have comparable bargaining or regulatory power and thus are charged either the full amount or a high percentage of the full amount, unless the hospitals voluntarily offer discounts.

The study found that hospitals’ high markups subject many vulnerable patients to exceptionally high medical bills, which often leads to personal bankruptcy or the avoidance of needed medical services.

Privately insured patients may also pay a greater premium because high markups give hospitals greater bargaining power with private insurers in price negotiations.

As a result, high markups play a role in the rise of overall healthcare spending.

Simply speaking, a patient wanting to compare hospital prices faces a substantial information asymmetry for an elective procedure, and the time necessary to conduct price and quality comparisons is certainly not available in most medical emergencies.

The result is a market failure that forces uninsured patients, out-of-network patients, and casualty and workers’ compensation insurers to pay charges that are marked up multiple times above costs and are much higher than what publicly insured and privately insured in-network patients pay.

The current regulatory environment, unfortunately, does little to correct this market failure. The extent of this market failure is especially salient in these fifty hospitals, the report found.

“The single payer model of health care reform supported by Physicians for a National Health Program (PNHP) requires that the for-profit elements of the health care delivery system be converted to nonprofit status,” said Don McCanne of Physicians for a National Health Program. “This report provides a prime example of the rationale of that proposed policy.”

“Of the fifty hospitals with the highest charge-to-cost ratios in the nation, forty-nine of them are for-profit,” McCanne said. “This article explains how these high charges create financial hardships for far too many individuals with health care needs while driving up private insurance premiums and driving up total health care costs for the nation.”