Do hospitals with high prices perform better?

We expect expensive restaurants to serve better food than cheap restaurants – higher priced meals should be higher quality, right? But what about hospitals? Do hospitals with high prices perform better than hospitals with lower prices?

This is a national cross-sectional study comparing prices and outcomes at almost 2000 US hospitals. Researchers looked at the price charged by each hospital for 4 major surgeries: abdominal aortic aneurism repair, colectomy, CABG and hip replacement. They divided the hospitals into groups, from those that charged the least to those that charged the most, and they called the 10% with the highest prices “high markup.” The data came from submissions that hospitals are required to submit to Medicare regarding costs, combined with billing data.

This graph shows hospital charges on the Y axis. You can clearly see that as you move to the right on the X axis, some of the hospitals charge a lot more than the others. Clearly, about 10% of the hospitals charge up to 10 times as much as the least expensive hospitals.

Here we see the outcomes. The gold boxes are the high markup hospitals, and even though those hospitals charge the most, they have far more complications, including infections, renal issues, cardiac issues, more readmissions and probably higher mortality. This is just stunning to me, it appears that if you are going to have surgery, and you are choosing between two hospitals, you’re better off going with the cheaper one, not the most expensive hospital.

Of course, we all know that hospital charges are a huge mystery. Hospitals are now required to post some prices online, but how many patients actually know what to look for in the price lists? I recently had someone at a conference tell me that an ER gave her Zofran intravenously, and the charge was $700 for the nurse to push the medication. That’s just ludicrous.

Hospital charges keep rising, and another recent article showed that those are the biggest reason for rising health insurance costs. At least when you go to a restaurant you know how much your meal is going to cost, and it’s a pretty safe bet that more expensive restaurants serve better food than cheaper restaurants.

Reference: Sakowitz et al. Hospital Price Markup and Outcomes of Major Elective Operations JAMA Surgery 2025;160:1241