When it comes to healthcare costs, Americans have been left in the dark.
Unlike when booking a hotel or buying a new flat-screen TV, Americans haven't had easy access to cost-comparison measures when deciding where to have their medical procedures done.
Turns out, if we had, some of us could have saved tens of thousands of dollars…
Last week, the Centers for Medicare and Medicaid Services released a colossal database of healthcare costs for the 100 most common inpatient procedures billed to Medicare for over 3,300 hospitals.
The results are staggering: Nationwide prices vary drastically, but more startling are the price differences for nearby hospitals.
For a patient receiving care for the lung illness chronic obstructive pulmonary disease (COPD), the 3rd leading causing of death in the U.S., treatment at Bayonne Hospital Center in New Jersey costs on average $99,690. Not even 30 miles away, at the Lincoln Medical and Mental Health Center in Bronx, NY the same treatment goes for just $7,044.
What's worse is that a top Medicare representative has no idea why prices vary so much.
"It doesn't make sense," Jonathan Blum, director of the government's Center for Medicare, told the Associated Press. "The higher costs don't reflect better care, and can't be explained by regional economic differences alone."
And while the COPD example is quite a glaring contrast in costs, there are far worse examples at how messed up healthcare is in this country.
Take a look.
Are You Paying Too Much in Healthcare Costs?
The biggest range in prices for neighboring hospitals occurs in Los Angeles, where treatment lasting over four days for a respiratory problem that requires a ventilator costs almost $597,000 at Cedar Sinai Medical Center, but less than 10 miles away at the California Hospital Medical Center, the same treatment could cost under $127,000- a $470,000 disparity.
In Florida at the Orange Park Medical Center a simple surgery to remove a gallbladder costs nearly $91,000, but nearby at St Augustine's Flagler Hospital the bill is just $40,000.
"If you're charging 10% more or 20% more than what it costs to deliver the service, that's an acceptable profit margin,"Gerard Anderson, the director of the Johns Hopkins Center for Hospital Finance and Management, told The New York Times. "Charging 400% more than what it costs has no rational basis in it at all."
It gets even worse when you compare hospitals in different states.
The average charges for joint replacement vary from about $5,300 at an Ada, OK hospital to $223,000 in Monterey Park, CA.
Further, an analysis done by the Washington Post of the 10 most common medical procedures showed hospitals in six states- California, Florida, Nevada, New Jersey, Pennsylvania and Texas – regularly had higher prices than the rest of the country.
Even though this massive data dump by the government reveals actual healthcare costs, it does nothing to shed light on why these differences exist, especially at hospitals in close proximity to one another.
Some hospitals said the higher bills they sent to Medicare reflected the fact that they were either teaching hospitals or they had treated sicker patients.
It's also unclear how quality of care factors in to the price differences.
One possible reason for the higher costs: insurers hunting for discounts.
Caroline Steinberg, an official at the American Hospital Association, told The Times that hospitals may raise their rates to protect their bottom line from insurers that demand bigger discounts.
Whatever the reason, hospitals should be ready to deliver answers.
"Hospitals that charge two or three times the going rate will rightfully face scrutiny," Health and Human Services Secretary Kathleen Sebelius told reports after the study was released.
If you think this cost disparity is outrageous, you should see this list of 15 Obamacare Facts the President Doesn't Want You to Know…
- Money Morning:
The Real Cost of Obamacare
- The New York Times:
Hospital Billing Varies Wildly, Government Data Shows
- Washington Post:
One hospital charges $8,000 – another, $38,000
- The Associated Press:
Some hospitals charge vastly more for same care