[ed. Follow-up to the recent article: Hospital Billing Varies Wildly, U.S. Data Shows. See also: Why Hospital Charges Vary So Much.]
It is in a faded blue-collar town 11 miles from Midtown Manhattan.
Based on the bills it submits to Medicare, the Bayonne Medical Center charged the highest amounts in the country for nearly one-quarter of the most common hospital treatments, according to a New York Times analysis of 2011 data, the most recent available. No other hospital was at the top of the price list more often.
Bayonne Medical typically charged $99,689 for treating each case of chronic lung disease, five times as much as other hospitals and 17 times as much as Medicare paid in reimbursement. The hospital also charged on average of $120,040 to treat transient ischemia, a type of small stroke that has no lasting effect. That was six times the national average and 24 times what Medicare paid.
For those prices, the quality of care at Bayonne Medical is no better — or worse — than that at most other New Jersey hospitals. In a 2011 state hospital quality report, Bayonne Medical scored only in the top 50 percent. But profits at the hospital, which was bankrupt in 2007, have soared in recent years, in part because it has found a way to turn some of those high billings into payments.
The increasingly contentious issue of hospital charges drew renewed attention last week when the federal government released Medicare data showing that facilities nationwide submitted widely divergent bills for the same treatments. And while the unassuming, six-story brick hospital here holds a notable place in those rankings, others stand out as well.
The midsize Crozer-Chester Medical Center in Upland, Pa., was the top biller in the country for urinary tract infections, while one prestigious Manhattan hospital, NYU Langone Medical Center, charged twice as much as the equally high-end NewYork-Presbyterian to implant a cardiac pacemaker. But Medicare considers the two New York hospitals so similar it pays them both about $20,000 for the procedure. The hospital industry is quick to say that the charges are irrelevant because virtually no one — private insurers, Medicare or even the uninsured — pays anywhere near those amounts. Medicare sets standard rates for treatments and insurers negotiate with hospitals. But experts add that the charges reflect decades of maneuvering by hospitals to gain an edge over insurers and provide themselves with tax advantages.
Until a recent ruling by the Internal Revenue Service, for instance, a hospital could use the higher prices when calculating the amount of charity care it was providing, said Gerard Anderson, director of the Center for Hospital Finance and Management at Johns Hopkins. “There is a method to the madness, though it is still madness,” Mr. Anderson said.
A close look at the finances of Bayonne Medical Center sheds light on how hospital pricing at the extremes may financially benefit an institution. The practices at Bayonne Medical also highlight a new financial strategy used by a small number of hospitals to increase their profits by “going out of network” — severing ties, and hence contractual agreements that limit reimbursement rates, with large private insurers.
by Julie Creswell, Barry Meier and Jo Craven McGinty, NY Times | Read more:
Image: Nadav Neuhaus for The New York Times
