New Data Shows Hospital Charges All Over the Map
Tuesday, December 10, 2013
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Bellevue Hospital and NYU Medical Center are adjacent and work closely together, but charge widely different prices.
(Fred Mogul/WNYC)
New York State has pulled back the curtain on hospital expenses. A new database shows what each hospital across the state charges for 1,400 different procedures, and what the “real costs” are at each place.
The differences can be dramatic: at Bellevue Hospital, the median charge for an uncomplicated birth is
$6,330, and at NYU Langone Medical Center, next door, the median
charge is $12,222. Lutheran Medical Center in Sunset Park, Brooklyn,
typically charges $5,686 and Maimonides Medical Center, a dozen miles
away, $14,763.
Patterns can be difficult to discern, and can vary from procedure to procedure. Overall, academic medical centers are more costly, because of the additional staff needed to provide medical training and greater use of technology. But that does not account for why at Westchester Medical Center, the median charge for a vaginal delivery is $22,143, and at New York Presbyterian Weill Cornell Medical Center, it is $11,900.
The Greater New Hospital Association said the information is “complex and can be confusing,” because “hospital charges do not reflect the far lower payments hospitals actually receive for the services they provide.” Medicare and Medicaid set much lower rates than what hospitals charge, and insurers and managed care companies negotiate rates that, likewise, have little to do with what hospitals ask to be paid.
People without insurance, however, are subject to these sticker prices. In practice, hospitals typically work out some kind of payment plan less than the charged amount and write off losses – but the payments can still be onerous.
Dr. Fred Hyde, from Columbia University’s Mailman School of Public Health, said the relationship between charges and underlying costs is tenuous at best.
“To a large extent, in the hospital field, we take our charges in accord with what we think we’re going to be paid, not in any relationship to the cost of goods sold or the combination of wages and materials or anything else that would go into a genuine cost measurement,” said Hyde, a physician who has been the head of two hospitals and a managed care company.
Experts say patients looking at possible hospital charges should look at the state database cautiously. In theory, they should be able to get the information directly from their hospitals and insurers, but in practice it is still likely to be a long time before that is possible.
Suzanne Delbanco, from the Catalyst for Payment Reform, said New York should look to New Hampshire and Massachusetts for models. Both states have websites that allow consumers to plug in their insurance plan, hospital and procedure, and get an accurate projection of real out-of-pocket costs.
“This is a good step toward greater transparency,” Delbanco said. “But it’s a baby step.”
In the meantime, she said, people should avoid falling into the trap of assuming places that charge more provide better care.
“Countless studies have looked at the relationship between cost and quality,” Delbanco said. “And the relationship just isn’t there.”
James Tallon, from the United Hospital Fund, said he hopes the newly released data will illuminate the true underlying costs of medical procedures and the wide variations in charges – perhaps eventually making the case for a return to stronger price controls that were in place, before deregulation in the 1980s.
“That’s an open political question – we’re nowhere near that now,” Tallon said, noting that New York “some three decades ago felt it perfectly reasonable public policy to standardize all these rate-setting decisions.”
Patterns can be difficult to discern, and can vary from procedure to procedure. Overall, academic medical centers are more costly, because of the additional staff needed to provide medical training and greater use of technology. But that does not account for why at Westchester Medical Center, the median charge for a vaginal delivery is $22,143, and at New York Presbyterian Weill Cornell Medical Center, it is $11,900.
The Greater New Hospital Association said the information is “complex and can be confusing,” because “hospital charges do not reflect the far lower payments hospitals actually receive for the services they provide.” Medicare and Medicaid set much lower rates than what hospitals charge, and insurers and managed care companies negotiate rates that, likewise, have little to do with what hospitals ask to be paid.
People without insurance, however, are subject to these sticker prices. In practice, hospitals typically work out some kind of payment plan less than the charged amount and write off losses – but the payments can still be onerous.
Dr. Fred Hyde, from Columbia University’s Mailman School of Public Health, said the relationship between charges and underlying costs is tenuous at best.
“To a large extent, in the hospital field, we take our charges in accord with what we think we’re going to be paid, not in any relationship to the cost of goods sold or the combination of wages and materials or anything else that would go into a genuine cost measurement,” said Hyde, a physician who has been the head of two hospitals and a managed care company.
Experts say patients looking at possible hospital charges should look at the state database cautiously. In theory, they should be able to get the information directly from their hospitals and insurers, but in practice it is still likely to be a long time before that is possible.
Suzanne Delbanco, from the Catalyst for Payment Reform, said New York should look to New Hampshire and Massachusetts for models. Both states have websites that allow consumers to plug in their insurance plan, hospital and procedure, and get an accurate projection of real out-of-pocket costs.
“This is a good step toward greater transparency,” Delbanco said. “But it’s a baby step.”
In the meantime, she said, people should avoid falling into the trap of assuming places that charge more provide better care.
“Countless studies have looked at the relationship between cost and quality,” Delbanco said. “And the relationship just isn’t there.”
James Tallon, from the United Hospital Fund, said he hopes the newly released data will illuminate the true underlying costs of medical procedures and the wide variations in charges – perhaps eventually making the case for a return to stronger price controls that were in place, before deregulation in the 1980s.
“That’s an open political question – we’re nowhere near that now,” Tallon said, noting that New York “some three decades ago felt it perfectly reasonable public policy to standardize all these rate-setting decisions.”
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Fred Mogul, Reporter, WNYC News
Fred Mogul has been covering healthcare and medicine for WNYC since 2002.
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