Rare look at Minnesota hospital costs finds huge swings
The findings, released Thursday by the state
While much of the cost was covered by insurance, the wide swings can ultimately affect out-of-pocket costs for patients and contribute to premium increases for employer-sponsored health coverage.
The report found that a simple appendectomy costs, on average, about
These differences did not arise because some patients were sicker or more medically complex than others. Researchers examined only cases of low or moderate complexity and made statistical adjustments to account for differences caused by age, gender, length of hospital stay and other factors.
"These variations reflect a market that is not necessarily working well," said
This is the second study of the topic released by the agency this year. The first was released in January and found similar results for four other common procedures: total knee and hip replacements and vaginal and C-section deliveries.
It is also part of a growing number of studies that pull back the curtain on the murky world of hospital reimbursements. It has long been known that some hospitals are generally more expensive than others, but this research shows that payment amounts can vary wildly even within the same hospital.
The study does not name the hospitals -- a condition of the state law that made the huge payment database available to researchers. That's a source of frustration for some consumer and business advocates.
"How long have we been asking for a level of transparency that will help us buy wisely and let us tell our employees what we are paying for?" said
The data "is locked down and it is top secret stuff," she said.
Competition?
Still, the
Although the
But the price differences within hospitals often reflect price negotiations between the facilities and insurers.
"It is all about negotiations, and that is what drives all of this stuff," said
That study found that hospitals facing little competition charge 15 percent more on average than those in areas served by four or more hospitals.
Hospitals and health plans with the most market share have the greatest advantage, but many market factors come into play. There are also negotiations between insurers and doctors' groups.
For a surgical group like Twin Cities Orthopedics, the fees are set by the patient's insurer rather than a hospital.
"We are paid different from insurer to insurer," said
The average price for spinal fusion surgery in
All of those prices were the result of fee negotiations among health plans, hospitals and physician groups, including the surgical group as well as the anesthesiology practice, which is a separate organization.
Confused consumers
Even in a state like
But with more health plans that require consumers to pay a portion of the bill out of pocket, the price swings for hospital procedures can have a tangible effect.
Most employer-sponsored health insurance coverage now has a deductible that must be satisfied before insurance will kick in. The size of deductibles have more than doubled in less than 10 years, according to
"Part of it is that people all have different insurance plans and so if there is a high charge and a high copay and a high deductible, the consumer ends up paying a whole lot of money," said
"All this price negotiation and all this back and forth takes an enormous amount of time and money," said Jankowski, who has also served on boards or councils for several local health plans. "What we have currently is not of very good value and a lot of money goes for administrative work."
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