Bayonne, New Jersey, is not a place you want to get sick. The New York Times has combed through Medicare data released by the government this month, and found Bayonne Medical Center charges the highest prices in the country for almost a quarter of the most common hospital treatments. For instance, a case of chronic lung disease will set you back $99,689 at Bayonne—5.5 times the cost most other hospitals will slug you. The behind-the-scenes story of how the hospital got so damn pricey is a prime example of the pricing strategies some hospitals use to profit from a confusing billing system.
Bayonne Medical actually filed for bankruptcy in 2007. Now, its revenue has nearly tripled and its operating income in 2011 was $9.3 million. How'd it do it? Converting into a for-profit hospital, advertising its low wait times, and becoming out-of-network for big private insurance companies so it could set its own prices. "Their model is to charge exorbitant rates, particularly for emergency room services, and if the insurance companies don’t pay them, they threaten to go after the member for the balance of billing," says a spokesperson from Aetna. The same company has now purchased two other hospitals.