Huge Disparities Continue regarding Health Care Costs

Daily Herald (Arlington Heights, IL), April 30, 2012 | Go to article overview

Huge Disparities Continue regarding Health Care Costs


Byline: Lindsey Tanner Associated Press

What do hospitals charge to remove an appendix? The startling answer is that it could be the same as the price of a refrigerator -- or a house.

It's a common, straightforward operation, so you might expect charges to be similar no matter where the surgery takes place. Yet a California study found huge disparities in patients' bills -- $1,500 to $180,000, with an average of $33,000.

The researchers and other experts say the results aren't unique to California and illustrate a broken system.

"There's no method to the madness," said lead author Dr. Renee Hsia, an emergency room physician and researcher at the University of California, San Francisco. "There's no system at all to determine what is a rational price for this condition or this procedure."

The disparities are partly explained by differences among patients and where they were treated. For example, some had more costly procedures, including multiple imaging scans or longer hospital stays. A very small number were treated without surgery, though most had appendectomies. Some were sicker and needed more intensive care.

But the researchers could find no explanation for about one-third of the cost differences.

Other developed countries have more government regulation that prevents these wild disparities. U.S. critics of that kind of system favor more market competition, yet the study illustrates that "the laws of supply and demand simply do not work well in health care," said Dr. Howard Brody, director of the Institute for the Medical Humanities at the University of Texas Medical Branch in Galveston and a frequent critic of skyrocketing medical costs.

The study was published in the journal Archives of Internal Medicine.

President Barack Obama's health care overhaul, now in the hands of the U.S. Supreme Court, would have little effect on the kinds of disparities seen in the study, policy experts say.

One section of the law bars tax-exempt hospitals from charging uninsured people more than the rates insured patients end up paying because of discounts negotiated by insurance companies. The government has not said how the reductions for uninsured people would be calculated, said health care consultant Keith Hearle.

The researchers examined 2009 data that hospitals were required to submit to the state on 19,368 patients with appendicitis. To get the fairest comparisons, the researchers included only uncomplicated cases with hospital stays of less than four days. Patients were 18 to 59 years old.

The study looked at what patients were billed, before contributions from their health insurance -- if they had any. The figures don't reflect what hospitals were actually paid. …

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