Nonetheless, there are
instances in which hospitals can profit from inflated sticker prices, medical researchers say. Some portion of commercial insurance rates are still pegged to a percentage of full charges, particularly for the most complex and expensive patients that require additional reimbursement.
Priselac estimated that roughly 10% of Cedars-Sinai's commercial insurance revenue may be tied to these list prices.
"There are certain cases in which what our charges are can impact what we do get paid," he said. "We are talking about a small fraction of our commercial payments."
Cedars-Sinai also attracts some wealthier, cash-paying patients from across the country and the world who may not question these higher rates.
Cedars-Sinai said higher patient charges don't necessarily translate into bigger payments from insurers. Priselac pointed to 2011 state data that showed Cedars-
Sinai's patient charges were nearly 60% higher than those of UCLA, adjusted for the number of patient days. But Cedars-Sinai's net patient revenue — what it actually got paid — was only 4% higher than that of UCLA, state records show.
Last year Cedars-Sinai reported revenue of $2.7 billion and net income of $133 million.
Priselac said 55% of the hospital's patients come from Medicare and Medi-Cal, the state's Medicaid program for the poor. He said those government programs paid Cedars-Sinai about $400 million less than what it actually costs to treat them. The hospital lost an additional $42 million on uncompensated care for the uninsured, he said.
To compensate, hospitals have routinely charged employers and their workers higher rates. Cedars-Sinai estimates that its rates for private insurers are about 35% higher than they would be otherwise.
Priselac said he supports increased price transparency for consumers, but he said any mechanism for doing so must reflect the far-reaching benefits that teaching and research institutions provide.
"When you are buying healthcare at Cedars-Sinai, you are not just paying for that clinical treatment," Priselac said. "You are basically paying for a societal good that benefits the entire community."
Cheryl Damberg, a senior researcher at Rand Corp., a nonprofit think tank in Santa Monica, said Cedars-Sinai and other big-name hospitals will face increasing pressure to bring their charges more in line.
"We need teaching institutions like Cedars both to train the next generation of professionals but also to serve as test beds for a lot of innovation," Damberg said. "But these new data are a signal to hospitals that people need to know what they're paying for."
Times data analyst Sandra Poindexter contributed to this report.