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How Much To Deliver A Baby? Charges Vary Widely by Hospital

By Roni Caryn Rabin

January 16th, 2014, 8:18 AM

Hospital charges for labor and delivery vary so widely from one California medical center to another that some facilities charge women eight to 11 times more than others, according to a new study.

Comparing nearly 110,000 uncomplicated births and Caesarean sections, researchers found the lowest charge for a vaginal birth involving an average woman was $3,296, while the highest was $37,227.

For an uncomplicated Caesarean delivery, the lowest charge was about $8,312, while the highest was $70,908.

The hospital charges – which did not include physician fees or charges for the baby’s care – were adjusted to compare patients with similar profiles who were of the same age and hospitalized for the same amount of time, the authors said. Estimated discounts paid by insurers were, on average, 37 percent of the charges.

“Health care pricing is kind of like the Wild West,” said Dr. Renee Y. Hsia, the paper’s lead author, an associate professor of emergency medicine at University California San Francisco and a Robert Wood Johnson Foundation physician faculty scholar.

“There is no real system of health care pricing. The ‘system’ is that hospitals are allowed to charge whatever they want and whatever they feel they merit.”

The study is being published in the Jan. 16 issue of BMJ Open, an online medical journal.

In the course of their research, the authors analyzed data on births in 2011 at 195 hospitals among women with private health insurance.

Private insurers rarely pay full hospital charges because they negotiate discounts with providers in their networks.  Researchers estimated discount rates using a formula because insurers and providers guard their actual payment rates as proprietary.

Uninsured patients are billed for the full charges, as are insured patients who go out of network, Dr. Hsia noted.

High hospital charges may mean insured patients incur higher out of pocket costs, and they often form the base for the discounts that insurers negotiate. As such, they play a role in driving up health insurance premiums.

The researchers found that hospitals charged more if they were located in areas with a higher cost of living, treated sicker populations or were for-profit institutions.

But the differences in hospital characteristics only explained about a third of the difference in the charges, the authors said.

Although some states including California have laws that aim to force transparency in hospital pricing, it is extremely difficult for patients to shop around and compare hospital charges. A study published in the Journal of General Internal Medicine in 2010 reported that less than a third of hospitals responded to letters requesting estimates for prices of common procedures.

Dr. Hsia said the new study focused on childbirth because it is the most common cause of hospitalization in the United States, but the variation in charges is not unique to delivery by any means. An earlier study by Dr. Hsia published in Archives of Internal Medicine in 2012 found that charges for a routine appendectomy in California ranged from as low as $1,500 to as high as $182,955.

“It’s not an exception, it’s the rule in the United States,” she said.

6 Responses to “How Much To Deliver A Baby? Charges Vary Widely by Hospital”

  1. camaron says:

    “There is no real system of health care pricing. The ‘system’ is that hospitals are allowed to charge whatever they want and whatever they feel they merit.”

    Nothing more needs to be said in support of a single-payer nationalized healthcare system. These corrupt shysters have been screwing the consumer for far too long. The American consumer has been held hostage long enough. Obamacare is not going to get us to cost containment. Obamacare is weak. We need much stronger legislation to reign in the corrupt practices of America’s healthcare system. It is time that Congress moves as fast as possible to single-payer healthcare. America pays twice as much as any other nation on earth for a healthcare system that does not even cover all of its citizens. We still have over 50 million people uninsured. We need change! NOW!

  2. K says:

    Different hospitals have different payer mixes. Critical access hospitals are reimbursed differently than disporportionate share, which are reimbursed differently from rural hospitals that aren’t critical access but predominantly reimbursed through medicare/medicaid, which are vastly different than large rural or suburban hospital who are reimbursed primarily by private payers. Each hospital payer mix is unique.
    And when the reimbursement model is crummy, and hospitals are getting shafted on medicare payements or have their disporportionate share payments cut, the hospital has to absorb the cost. So it’s no wonder that the cost of one procedure can vary so greatly across hospitals. And thus far, hospitals have no incentive to reduce costs. If a certain procedure costs X dollars, and then hospitals find a way to reduce costs and complete the procedure for Y dollars, they’ll get reimbursed with Y. So what’s the incentive to reduce cost?
    A move to pay-for-performance, rather than fee-for-service, could help with these issues. When doctors are compensated for maintaining quality overall health or their hospital populations, rather than for performing X number of surgeries, regardless of outcome, healthcare in general will vastly improve.

  3. Ann says:

    How can any rational person defend the wide variations that hospitals charge consumers? Can unusual circumstances happen occasionally? Can demographics have an effect? Can rural settings versus urban settings affect cost? Common sense says they can. But some hospitals routinely charge more, by outrageous amounts, than others. Nobody is questioning variations in terms of single digit percentages. However, when certain hospitals always charges 8 to 11 times more to deliver a baby than the national average, questions need to be asked and administrators need to be exposed.

  4. Fred says:

    Nationally, if the average vaginal deliver costs $3296 and the average Cesarean delivery costs $8312, then that should be the reimbursement. That seems to be fair. Can a hospital do it for less? If they can, they they enjoy a profit. If they can’t then they suffer a loss. Hopefully, hospitals will work harder to have more successful deliveries and be profitable. A successful delivery is defined as “value”. A successful delivery benefits everyone. Hospitals should strive to attain success in everything they do. Failure is costly. It’s capitalism at its best! We should stop rewarding failure. Regardless of extenuating circumstances, hospitals should operate on a system of risk and reward. According to the rules of capitalism, businesses fail every single day based on risk and reward. The same rules should apply to hospitals. They should get paid an average reimbursement. That’s it! If they fail to deliver, pardon the pun, they should suffer the consequences.

  5. calisgail says:

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  6. SallyAshus says:

    Fred, did you read the article? $3296 was the LOWEST charge for an an uncomplicated vaginal delivery in CALIFORNIA, and $8312 was the LOWEST charge for an “uncomplicated” (whatever THAT means) Caesarean delivery in CALIFORNIA. There is no mention of what the mean, median, or modal cost was for California, and no references at all to national statistics. There is also no mention of the requirements in California law that mothers and babies may not be discharged earlier than 48 hours after a vaginal delivery, or 96 hours after a Caesarean delivery, which may skew comparisons to costs in other States. The point of the study is to note the incredible variation in hospital charges for the same care and procedures. In 1996 The Sacramento Bee published a similar study showing the great variation in charges among hospitals across the state for standard care for vaginal delivery, Caesarean delivery, and appendectomy. In that study published nearly 2 decades ago, the highest -cost hospital was UC-Davis Medical Center, certainly NOT a for-profit facility, but a teaching hospital also functioning as the county hospital and serving a large and very diverse population. It would be very interesting to compare the costs and rankings from 1996 to this study.