New Database Reveals Massive Disparity in Medical Costs

A new federal database of hospital prices shows adjacent hospitals charging up to a $200,000 difference for the same procedure.  Secretary of Health and Human Services Kathleen Sebelius, who spearheaded a new transparency initiative to reveal traditionally secretive hospital bills stated that, “Average inpatient charges for services a hospital may provide in connection with a joint replacement range from a low of $5,300 at a hospital in Ada, Oklahoma, to a high of $223,000 at a hospital in Monterey Park, California. Even within the same geographic area.”
There is some debate about how much is actually being paid by patients, insurance providers and the government. “It’s true that Medicare and a lot of private insurers never pay the full charge,” said assistant professor at the University of California at San Francisco Medical School, Renee Hsia, “But you have a lot of private insurance companies where the consumer pays a portion of the charge. For uninsured patients, they face the full bill. In that sense, the price matters.”
Another possible explanation for these drastic differences in price may be quality. Some patients might be perfectly willing to spend an extra $100,000 on an operation assuming “you get what you pay for.” But, it’s not clear whether that’s the case, because there is no data correlating patient outcomes with price.  New websites have been developed to give patients rankings of medical quality at different facilities.  One example would be the site Healthtap which allows patients to anonymously seek free public medical advice from a community of doctors who are active on its forums. Like many social media sites, the more likes a doctor gets, the better he is viewed among his peers.
Still much more transparency is needed to accurately assess whether the difference in quality is worth the extra cost.
The Center for Medicare and Medicade Services released a public spreadsheet for the top 100 most frequently billed procedures in more than 3,000 hospitals around the country.
As compiled by the Washington Post’s Sarah Kliff and Dan Keating:

  • Ventilator: $115,00 George Washington University vs. $53,000 at Providence (5.4 miles distance)
  • Lower limb replacement: $117,000 at Richmond CJW Medical Center vs. 25,600 at Winchester Medical Center
  • Pneumonia: $124,051 in Philadelphia vs. $5,093 in Water Valley, Mississippi.

Source: Tech Crunch