Short Takes On News & Events

At Hospitals You May Not Get What You Are Charged For

By Jordan Rau

July 17th, 2013, 9:05 AM

It’s well known that the listed charges hospitals set for surgeries and other procedures — recently spotlighted by Medicare – bear little resemblance to the actual prices most patients end up paying.  An analysis by Castlight, a San Francisco company that helps employers and workers compare provider prices, also finds that the hospital charges bear little relationship to the quality of the care.

Castlight Health focused on hospitals’ charges for a joint replacement that didn’t involve major complications. The company compared hospitals’ average charges to a safety score the company calculated from Medicare data. That score combines hospitals’ rates of serious complications, infections and other potentially avoidable health problems that occurred during patients’ stays.

As the following Castlight charts show for New York, Boston, Los Angeles and Washington, an expensive charge for a joint replacement is no guarantee that the hospital is safer than one that lists a cheaper charge. The Boston and Washington rates show that the most expensive high quality hospital will replace a knee for less than the most expensive low and average quality hospitals. In New York City, there’s a huge overlap between average and high cost hospitals, and in both New York City and Boston one could find a moderate quality hospital that performs a knee replacement for no more than a low quality hospital. Overall, Castlight said there was no statistical relationship between the cost of the knee replacements and the quality of the hospitals.

Castlight provided the charts to Kaiser Health News. A caveat: the Medicare data include lots of patients who were in the hospital for something other than a joint replacement.

Castlight performed a similar analysis with a common procedure for those too young for Medicare: pregnancy. There too, Castlight found no noticeable relationship between the price self-insured companies paid for pregnancy and delivery services — as recorded in Castlight’s database of client claims — and the quality of the care as judged by data from the Leapfrog Group, a nonprofit run by employers. That data looked at whether babies were delivered at term, without needless cesarean sections and other measures of quality.

“There’s no correlation between what you pay and what you get,” said Dr. Jennifer Schneider, Castlight’s senior director of clinical design. “You could actually get an above-average delivery from a below-average place in terms of cost.”

In fact, the Castlight charts below show that in Chicago, New York and Seattle metropolitan areas, the hospital that was the most expensive for pregnancy and delivery was also rated below average in quality by Castlight.  (Not all hospitals respond to Leapfrog’s surveys, so not all were rated.)

7 Responses to “At Hospitals You May Not Get What You Are Charged For”

  1. Ray says:

    If only consumers could see prices for procedures before the bill came. Imagine if healthcare was like electronics, or maid services, or a restaurant. Read a review, check prices, and go to the place that best suits your needs. Those low-priced above-average hospitals would get business out the wazoo, the below average performers (who have some obscenely high costs in comparison) would be forced to lower their charges to a level representative of their quality. The entire system would be more efficient, with less waste, and the cost curve would be bent down for consumers across the country. Market forces could come into play for this industry, after being missing since WWII.

    But, instead, our government is forcing us to purchase extremely comprehensive health insurance, where all that most people will ever see is a co-pay. Behind the scenes, insurance companies are paying these bills, and consumers are racking them up without concern because it makes no difference to them. Hospitals are free to charge whatever they want, because they get paid regardless and the patients aren’t the ones footing the bill.

    We have the highest healthcare costs of any country in the world by a long shot, and don’t even make the top 25 in results. We also have this unique system. Anyone else think it might be the problem?

  2. wilson says:

    Yeah…

    We are long overdue for a non-profit single-payer government run healthcare system. Most industrialized nations in the world ditched the idea of mixing capitalism and healthcare a long time ago. Making huge profits from sick and dying people is only reserved for the most primitive of societies. That’s what makes me wonder about America. The word “healthcare” is an oxymoron in America. In America, what we see is fee-for-service sick care. Any provider that is motivated to make a profit by keeping their waiting rooms filled with sick patients and any hospital that is motivated to make a profit by keeping 100 percent of their beds filled with sick and dying patients should be ashamed of themselves. America’s healthcare system is brutal and barbaric!

  3. John Spek says:

    WILSON SAYS:

    Yeah…

    We are long overdue for a non-profit single-payer government run healthcare system

    No we are not – we have it

    Indian Health Services is one version – and government fails to fund it fully every year, so they go for ER care and add to the deficit

    VA health care is another – and we are at a 24 month plus wait for services, paper files that threaten to collapse the building they are stored in, and multiple cases of malpractice that threatened thousands of lives in 2011 and 2012

  4. Paul says:

    Just one more “spek” in the eye of healthcare progress in America.

  5. wilson says:

    John,

    If Americans are so dumb as to listen to your friend Michele Bachmann (MN-06) and her rapidly dwindling tea party caucus in the U.S. House of Representatives, then Chicken Little is alive and well with regard to the Affordable Care Act and the sky really is falling. Morons!

  6. Paul Young says:

    One critical piece missing is that different health plans pay different amounts for the same procedure. So Insurer A pays $1,000 for an MRI at Hospital X, while Insurer B pays $1,200.
    An all payor fee schedule would help to simplify things. However, only Maryland has such a system.

  7. Marie Williams says:

    That congress fails to properly fund the Indian Helth Services and the VA does not necessarily mean that the systems themselves are problematic, only that those who hold the purse strings are.

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