Definitions
340B: U.S. federal program created in 1992 and managed by the Health Resources and Services Administration (HRSA). It requires pharmaceutical manufacturers to sell outpatient drugs at steep discounts (typically 20% to 50% off) to qualifying healthcare organizations and safety-net hospitals that care for low-income, uninsured, and vulnerable patient populations.
C.diff: short for Clostridioides difficile, a bacterium that can infect the large intestine and cause severe inflammation and diarrhea.
CAUTI: Catheter-Associated Urinary Tract Infection, an infection that happens when germs (like bacteria) enter the urinary tract through a tube—called a urinary catheter—that is put into the bladder to drain urine. It is one of the most common types of infections people can get in hospitals or care clinics.
Commercial OPM: Commercial Operating Profit divided by Commercial Net Patient Revenue.
CMS Stars: a 1-to-5 scale used by the Centers for Medicare & Medicaid Services to measure the quality, performance, and member satisfaction of Medicare Advantage (Part C) and Part D prescription drug plans, as well as nursing homes. Five stars represent excellent performance, while one star indicates poor quality
Commercial Breakeven: the percentage of Medicare payment that commercial payers would need to pay for the hospital to break even across.
Commercial Price (Above Medicare): the price average commercial reimbursement rate relative to Medicare from RAND 5.1 hospital price transparency data. Dictates how much more commercial plans are charged by hospitals compared to the Medicare rates.
Hospital Operating Costs: The portion of Hospital Expenses related only to Hospital Patient Care and eligible for reimbursement per Medicare federal regulations, sometimes referred to as Medicare Allowed Costs.
Leapfrog Grade: The Leapfrog Hospital Safety Grade are letter grades (A, B, C, D, or F) assigned to general hospitals across the United States based on patient safety measures. Uses up to 32 evidence-based measures of patient safety, relies on data from the Centers for Medicare & Medicaid Services (CMS) and volunteer transparency from hospitals. The rates are updated twice a year (in the spring and fall).
Medicaid OPM: Medicaid Operating Profit divided by Medicaid Net Patient Revenue.
Medicare Adv OPM: Medicare Advantage Operating Profit divided by Medicare Advantage Net Patient Revenue.
Medicare OPM: Medicare Operating Profit divided by Medicare Net Patient Revenue.
MRSA: methicillin-resistant Staphylococcus aureus. It is a type of staph bacteria that does not respond to many common antibiotics like penicillin and methicillin.
Net Income (Loss): Net Patient Revenue, minus Operating Expenses, plus Other Income and Expense. Represents earnings retained by the hospital.
Net Patient Revenue: Gross patient charges, minus contractual discounts, bad debt and charity care allowances, and other deductions agreed to by the hospital. Numbers reported from hospital’s accounting records.
Net Profit Margin: Net Income divided by Net Patient Revenue, representing the percentage of Net Patient Revenue retained by the hospital.
Operating Expenses: Hospital Operating Expenses, as recorded in hospital accounting records.
Operating Margin: Operating Profit (Loss) divided by Net Patient Revenue.
Operating Profit (Loss): Net Patient Revenue minus Hospital Operating Costs.
Payer Mix: Percentage of total hospital services provided to each payer type, as measured by hospital charges. Hospital charges are total inpatient and outpatient charges for services provided by the hospital, including charity care. Charges are the list prices set by the hospital, and similar to Manufacturer Suggested Retail Price in other markets.
Postoperative Sepsis Rate: measures the number of secondary sepsis cases that develop per 1,000 elective surgical hospital discharges for adult patients.
Price Gap: the RAND 5.1 Price minus Commercial Breakeven. Larger gaps suggest commercial prices are farther above the hospital’s estimated break-even level.
RAND 5.1: an employer-led hospital price transparency initiative. It analyzes private health insurance and employer claims data to compare what commercial plans pay hospitals versus what Medicare pays for the same service.
Sources
Centers for Medicare & Medicaid Services. (2026). National Health Expenditure Data: Historical. U.S. Department of Health and Human Services. Retrieved July 7, 2026, from https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/historical.
Centers for Medicare & Medicaid Services. (n.d.). Overall hospital quality star rating. Provider Data Catalog. U.S. Department of Health and Human Services. https://data.cms.gov/provider-data/topics/hospitals/overall-hospital-quality-star-rating
KFF. (n.d.). Average annual family premium per enrolled employee for employer-based health insurance. KFF State Health Facts. Retrieved July 7, 2026, from https://www.kff.org/private-insurance/state-indicator/family-coverage/
National Academy for State Health Policy. (2025). Hospital Cost Tool (Version 5.0). NASHP. http://tool.nashp.org.
National Academy for State Health Policy. (2022, March 28). Understanding NASHP’s Hospital Cost Tool: Commercial Breakeven. https://nashp.org/commercial-breakeven/
National Alliance of Healthcare Purchaser Coalitions. (2023, September 19). Setting the record straight: The urgency of achieving hospital fair price. https://www.nationalalliancehealth.org/resources/the-urgency-of-achieving-hospital-fair-price/
Peterson-KFF Health System Tracker. (2026). How does health spending in the U.S. compare to other countries? https://www.healthsystemtracker.org/chart-collection/health-spending-u-s-compare-countries/
The Leapfrog Group. (n.d.). About the Grade. Leapfrog Hospital Safety Grade. https://www.hospitalsafetygrade.org/about-the-grade
U.S. Bureau of Labor Statistics. (n.d.). Detroit-Warren-Dearborn, MI economy at a glance. U.S. Department of Labor. Retrieved July 7, 2026, from https://www.bls.gov/eag/eag.mi_detroit_msa.htm
U.S. Bureau of Labor Statistics. (n.d.). Quarterly Census of Employment and Wages (QCEW). U.S. Department of Labor. Retrieved July 7, 2026, from https://www.bls.gov/cew/.
Whaley, C., Kerber, R., Wang, D., Kofner, A., & Briscombe, B. (2024). Prices Paid to Hospitals by Private Health Plans: Findings from Round 5.1 of an Employer-Led Transparency Initiative. RAND Corporation. https://www.rand.org/pubs/research_reports/RRA1144-2-v2.html