Hospitals with decreasing cost-to-charge ratios bill greater surgical charges for similar outcomes

Abstract

BackgroundThe cost-to-charge ratio reflects the markup of hospital services. A lower cost-to-charge ratio indicates lower costs and/or greater charges. This study examines factors associated with cost-to-charge ratio trends to determine whether decreasing cost-to-charge ratio is associated with worse surgical outcomes. MethodsThe Florida Agency for Healthcare Administration Inpatient database (2018–2020) was queried for common surgical procedures and linked to the Distressed Communities Index, RAND Corporation Hospital data, Center for Medicare Services Cost Reports, and American Hospital Association data. Only hospitals with monotonically increasing or decreasing cost-to-charge ratio were included in the study. Univariable analysis compared these hospitals. Using patient-level data, interpretable machine learning predicted cost-to-charge ratio trend while identifying influential factors. ResultsThe cohort had 67 hospitals (27 increasing cost-to-charge ratio and 40 decreasing cost-to-charge ratio) with 35,661 surgeries. Decreasing cost-to-charge ratio hospitals were more often proprietarily owned (78% vs 33%, P = .01) and had greater mean total charges ($134,349 ± $114,510 vs $77,185 ± $82,027, P < .01) with marginally greater mean estimated costs ($14,863 ± $12,343 vs $14,458 ± $15,440, P < .01). Patients from decreasing cost-to-charge ratio hospitals had greater rates of most comorbidities (P < .05) but no difference in mortality or overall complications. Machine-learning models revealed charges rather than clinical factors as most influential in cost-to-charge ratio trend prediction. ConclusionsDecreasing cost-to-charge ratio hospitals charge vastly more despite minimally greater estimated costs and no difference in outcomes. Although differences in case-mix existed, charges were the predominant differentiators. Patient clinical factors had far less of an impact.