NCPA - National Center for Policy Analysis

New Information Reveals Huge Price Variation between Hospitals

May 9, 2013

New data has been released that reveals how much hospitals charge for the 100 most common inpatient procedures. The data reveals enormous variation between hospitals that have long guarded their prices in the name of competitive advantage. Hospitals across the street from one another or in the same neighborhood have drastically different prices, which demonstrates the challenges consumers face in valuing and paying for health care, says the Washington Post.

  • At the University of Miami Hospital, a heart attack with four stents costs $166,000, an intestine procedure with major complications costs $248,000 and a permanent pacemaker implant costs $127,000. Across the street at Jackson Memorial Hospital, the same surgeries cost $89,000, $185,000 and $66,000, respectively, and each with a higher average reimbursement rate.
  • In the District of Columbia, George Washington University charges $115,000 for a patient on a ventilator and $69,000 for a lower joint replacement compared with $53,000 and $30,000, respectively, at other local hospitals.
  • In Virginia, the CJW Medical Center in Richmond charges more than $117,000 for a lower limb replacement, while another Virginia hospital charges $25,000.

While all of the above figures are averages, the wide variation is repeated in cities and between hospitals around the country. Experts attribute the variation to a third party payer health care system that insulates consumers from ever truly seeing the cost of their health care services.

  • Further clouding the true cost of health care is the fact that Medicare and private insurers typically negotiate lower reimbursement rates.
  • In their defense, hospitals claim that the list price and charges come from a master list that rarely, if ever, represents the price consumers actually pay.
  • The variation in costs does not seem to vary by geography, given that hospitals across the street from each other can have completely disparate prices.

Critics of the information release say that the prices do not reflect quality and that a lower priced hospital may not offer the same quality of care as a higher priced hospital. Regardless of how consumers and politicians react to the now exposed price disparities, transparency in the health care system is long overdue.

Source: Sarah Kliff and Dan Keating, "One Hospital Charges $8,0000 -- Another, $38,000," Washington Post, May 8, 2013.


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