Health & Medicine

July 13, 2012

Hospital surgery prices vary widely

A group of public-interest researchers took on the veiled, confounding world of hospital pricing Thursday in a report that questioned why a common surgery cost $40,000 at one hospital in the Sacramento region and $17,000 at another.

A group of public-interest researchers took on the veiled, confounding world of hospital pricing Thursday in a report that questioned why a common surgery cost $40,000 at one hospital in the Sacramento region and $17,000 at another.

Pressing for more transparency in hospital pricing, the study by the California Public Interest Research Group, a consumer watchdog organization, spotlighted wide disparities in the cost of surgeries statewide.

Among its findings, the study showed that the Sacramento region's price tag for common surgeries ran higher – 111 percent of the state's median.

As health care costs continue to escalate, the study's results offer a glimpse into the erratic and hurly-burly nature of hospital pricing, said its authors. They also underscore the need to get medical spending under control if overall health care costs are to drop as envisioned by the federal health care overhaul.

Californians spent an average of $6,238 each on health care in 2009, 70 percent higher than 10 years earlier, the study said. From 2001 to 2009, insurance premiums for California families rose by 113 percent.

The study was drawn in part from 2010 figures that hospitals were required to report to the state, listing charges for various procedures. Some differences in regional pricing were hard to explain.

In the Sacramento region, for example, the charge for a typical patient having a laparoscopic hysterectomy was $47,500, compared with $34,400 for an Orange County patient. The cost of the same procedure in Contra Costa County soared to $83,172.

For angioplasty, Sacramento area hospitals charged an average of $85,520, while Bakersfield hospitals charged $44,000. In San Jose, the price was $144,922.

Even the report's authors admitted to being baffled by the huge differences in what hospitals charge for the same procedure.

"It's actually our point that they should also report what they get paid – not just what they charge – so we know how much things cost," said Pedro Morillas, legislative director of CALPIRG.

That's easier said than done, said the California Hospital Association's Jan Emerson-Shea, vice president for external affairs. In reality, Emerson-Shea said, so many factors figure into hospital pricing that you could end up with "38 million prices for the 38 million people in California – because each is an individual with different health circumstances."

In other words, a gall bladder surgery for someone who is a diabetic would likely cost more than for a patient who does not have diabetes, she said. Thus, the prices that hospitals are required to report for various procedures tell just half, if that much, of the story, she said.

Other factors affecting the size of patients' bills include their insurance coverage, how expensive a hospital's specialty services are and the separate doctors' and specialists' invoices patients receive on top of the surgery price tag, she said.

"This is not like going down to the auto shop and getting a quote for an oil and lube job," Emerson-Shea said.

And though hospitals hardly post fee schedules on a public menu board, transparency exists through "the good-faith estimate" patients can ask for if they want to know the cost of a procedure, she said.

Morillas, on the other hand, said patients may not trust the hospital's estimates and should have a broad range of information at their fingertips. "For something as essential as health care, we need easy access to clear information," he said. "It absolutely helps if a patient can shop around, not just for the price they pay but for outcomes as well."

Currently, patients have little evidence that a more expensive surgery will lead to a better outcome, he said.

Even hospitals in the same region reported drastically different price tags for their surgical services, as witnessed in the Sacramento region.

A knee replacement at Sutter General Hospital cost $86,002 in 2010, the study said. But just a couple of miles down the road, at the UC Davis Medical Center, the same procedure cost $126,292. In the Sierra foothills, at Marshall Medical Center in Placerville, knee replacement cost $142,722. Meanwhile, the study listed Rideout Hospital in Marysville as seemingly the best deal, at $48,507.

Price shopping for a Caesarean section in the Sacramento region also yields a range of results, according to the survey. The highest price was at Marshall Medical Center in Placerville, $40,167. Among the lowest was Sutter Roseville Medical Center, at $17,560. Mercy Hospital of Folsom charged $24,349, with the area's other two Mercy facilities – Mercy San Juan Medical Center in Carmichael and Mercy General Hospital in Sacramento – charging $25,163 and $24,692, respectively, the study showed.

But even price shopping from the list CALPIRG assembled is somewhat hit-and-miss because it lacks Kaiser Permanente hospital charges. Because Kaiser operates under a different business model, and is both insurer and provider with doctors as employees, it is not required to report the same data as the other hospitals, said Emerson-Shea.

"This notion that consumers actually go and shop around – that's not what really happens," she said, noting that most people simply follow the protocols of their health care plan.

Agreed, says Morillas. One of the points of the CALPIRG study was to shine a light on the confusion of hospital pricing, he said, as well as the ground yet to be covered if health care costs are to be understood and controlled.

"The bottom line is we all need more information," Morillas said.

Editor's Note: This story has been changed from the print version to correct the Sacramento region's costs for surgeries in relation to the state median. Corrected on July 17, 2012.

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