By Al Charbonneau, Executive Director at Rhode Island Business Group on Health
Rising hospital costs continue to challenge employers and working families across the country — and Rhode Island is no exception. Last year, the Rhode Island Business Group on Health (RIBGH) released a series of issue briefs, which revealed that hospital pricing, growing overhead, and limited transparency are driving up premiums for employers and employees alike.
RIBGH’s research showcases the scale of the problem:
- Between 2012 and 2022, family premiums in Rhode Island increased to account for as much as 28% of the median household income — among the highest in the nation.
- From 2012 to 2022, hospitals represented half of all commercial health insurance spending, with outpatient costs rising faster than prescription drugs.
- In 2022, hospitals spent nearly twice as much on administrative costs ($600 million) as on nursing salaries ($319 million), raising questions about efficiency.
- By 2022, hospital overhead costs drove 53% of hospital expense growth in Rhode Island.
- And by 2024, Rhode Island hospitals carried the sixth highest overhead operating cost in the country, driven in large part by expanding partnerships with physician groups, rising administrative expenses, and operating retail pharmacies within hospital settings.
Further, recent data from the Providence Journal found shocking pricing inconsistencies at Rhode Island hospitals. Analyses show the negotiated rate for a major hip replacement surgery ranged from $23,270 at one hospital to $53,551 at another, in addition to prices for an appendix removal and colonoscopy varying from $669 to $14,247. Even within the same health system and insurer, prices for identical procedures can more than double — underscoring the ongoing opacity of hospital pricing and the risk of unexpectedly high costs depending on where patients receive care.
These findings paint a frustrating picture and employers in Rhode Island are reaching a breaking point as hospitals now account for half of all commercial spending — with most of that growth driven by overhead, not patient care. We need a serious conversation about hospital system efficiency and accountability to ensure resources go towards improving health, not just expanding administrative footprints.
Unchecked hospital pricing power is not just an economic issue; it’s a policy failure. Employers deserve a seat at the table and fair, competitive prices that reflect the true cost and quality of care. Together, we’re calling for real solutions that ensure transparency, accountability, and value in hospital pricing.