California hospitals overbilled insurers to make up for lost profits, analysis concludes

California hospitals hospitals charged insurers 53 percent more than the cost of services they provided, according to an analysis of financial information from 300 hospitals between September 2008 and October 2009, the Sacramento Bee reports. Much of the rising costs were due to attempts to regain income lost due to poor and uninsured patients, as well as increased salaries and expensive construction projects, according to the newspaper. 

For months, health insurance companies--Anthem Blue Cross of California, in particular--have blamed the rising cost of healthcare as a key driver in skyrocketing insurance rates. Now, they may have their proof. 

"It's become en vogue to crucify the insurance companies," Will Fox, a principal for Seattle-based consulting firm Milliman, told the Bee. "It's the hospitals that hold insurance companies hostage." 

In particular, the Bee singled out Northern California-based Sutter Health as one of the main culprits of the price gouging. The chain's Sutter Medical Center brought in $420 million from insurers to pay for medical services from October 2008 to September 2009, 127 percent more than was spent providing those services. 

Some of the rising costs could, perhaps, be blamed on the steady increase in the price of medical supplies. North Carolina-based Premier health care alliance estimated that over the next 12 to 18 months, the price of surgical supplies will increase by 2.8 percent, while the cost of lab supplies will increase by 3.9 percent.

For more information:
- read this Sacramento Bee article
- check out the amednews piece
- read this Premier press release
- here's Premier's "Economic Outlook" report