Most Hospitals in America Use the Cost-to-Charge Ratio to Estimate Their Costs for Specific Services Such as an MRI, Surgery or Endoscopy. However, the Cost-to-Charge Ratio is Inaccurate.
The Cost-to-Charge Ratio is Calculated Based on Total Costs Divided by Total Billed Charges. That Ratio is then Multiplied by the Billed Charges for a Specific Service… Such as an MRI, Surgery or Endoscopy.
HOWEVER, A Hospital’s Billed Charges Are Intentionally Inflated for Specific Services to Increase Reimbursement… This Practice is Called ‘Strategic Pricing’ or ‘Strategic Rate Setting.’
Therefore, When the Cost-to-Charge Ratio is Applied to the Inflated Charges, It Results in Artificially Inflated Costs.
Sources HERE: https://vimeo.com/489013784
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