Hospital Costs Differences Highlighted by Healthcare Cost Databases

Last Updated September 24, 2018

It is human nature to want the best product or service at the best price, but when it comes to healthcare and hospital charges it is almost impossible to figure out what – or who – is best.

Comparison shopping is done every day for items such as groceries and gasoline. Consumers can compare mechanic’s charges and salon fees online, but until recently there was no real way to compare medical care costs.

That ended in 2013 when the federal government released hospital prices for the 100 most common inpatient procedures.

Everything from treating simple pneumonia to lower joint replacements was examined. In Dallas, for example, one hospital charged almost $15,000 for treating pneumonia while another nearby institution charged twice that. In Florida, one hospital billed $40,000 dollars to remove a gallbladder, while another nearby hospital charged more than double for the same procedure: $91,000.

Hospitals defend their pricing practices by citing examples of caring for sicker patients than competitors. Some teaching institutions cite their roles as training facilitators for higher costs.

Geography didn’t seem to have a huge impact on how one facility charged over another. Hospitals in California, Florida, Nevada, New Jersey, Pennsylvania and Texas routinely charged the most while data showed Idaho, Montana and North Dakota had the lowest prices. All price data was from 2011.

According to the Washington Post, “Experts attribute the disparities to a health system that can set prices with impunity because consumers rarely see them — and rarely shop for discounts. Although the government has collected this information for years, it was housed in a bulky database that researchers had to pay to access.”

Medicare does not usually pay what a hospital charges since the Centers for Medicare and Medicaid Services have a standardized payment system. Private insurance companies don’t pay out at the listed rates either since they usually negotiate terms with hospitals. So who pays full price? The uninsured; however, many hospitals are willing to negotiate with patients for lesser payment.

Healthcare is a public service industry. Ready access to computers and public databases are providing potential patients with a much greater chance to shop around.

Three of the country’s largest health insurers and the Health Care Cost Institute (HCCI) recently announced a joint venture to create an online portal, which will allow consumers easy access to healthcare cost and quality data. It will be available to everyone and will include information from commercial health plans, Medicare Advantage and Medicaid.

“Voluntarily making this information available will be of immeasurable value to consumers and other health system participants as they seek to manage the cost and quality of care,” HCCI Executive Director David Newman said.