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: First-ever Release of U.S. Hospital Prices Begs Some Obvious Questions

First-ever Release of U.S. Hospital Prices Begs Some Obvious Questions

Content Specialist

The U.S. government on May 8, 2013, released price information for some of the most common medical procedures for the first time. Here's what we learned:  


Costs vary by state: Six states' hospital costs came in uniformly high, while other states' costs came in either uniformly low or average. These cost disparities have little or nothing to do with the overall quality of the hospitals in a particular state. If that's the case, shouldn't a given procedure at a hospital in one state cost about the same as that same procedure at a hospital of comparable quality in another state?


Costs vary by hospital: In New York City, for example, treatment for a complicated case of bronchitis or asthma costs a mere $8,153 (average) at Metropolitan Hospital Center. Treatment for that same condition at NYU Hospitals Center, just 63 blocks away from Metropolitan and on the same street, costs $34,310 (average). You could pay for the treatment at Metropolitan 4.2 times over before you reached the amount you would spend for that same treatment at NYU. Shouldn't patients be presented with that information so they can conduct the same cost/quality/benefit analyses on which they rely for decision-making about commercial purchases?


Without an open market, health care costs are based on what consumers (and largely, insurers) are willing to pay, not what the care is actually worth or what it costs to provide (for example, there have been instances of life-saving drugs that enter the market at relatively low costs that then grow exponentially as patients continue to purchase the drug at higher and higher costs, simply because they need it to survive another year).


Price Revelation a Long Time Coming


This was the first time the government had required this information to be made public. The United States spends more than twice as much per person on health care as other industrialized countries, yet we remain one of the only developed countries without basic health insurance for all citizens.


In a capitalist economy where we eschew monopolies and rely on our open markets to shop for the best value on everything from gas to groceries, why have we not been able to do the same with health care?


When a doctor says we need something, we trust. We trust that the doctor is right about our diagnosis and treatment, because we don't know. We trust that whatever that treatment costs is what we need to pay, because we have no way to know. And while we have the opportunity to get a second opinion, what we don't have is the opportunity to shop around for cheaper costs. Today, most doctors and hospitals are not even able to give you an up-front cost estimate, even upon request; you're expected to undergo tests and procedures, and then you wait for the bill and hope you'll be able to cover whatever remains after insurance (if insurance is even available).


How can we reconcile that blind trust toward the health care sector with our attitude toward the commercial sectors, where we demand and rely on transparency to make the decisions that are right for us and to control costs across the industries?


Furthermore, with the Patient Protection and Affordable Care Act set to go into full effect next January, how can we afford to cover additional costs for the currently uninsured without making even the smallest effort to see that the costs we cover are fair and reasonable? While many factors driving health care costs are out of our control, is an open market where providers are required to compete-thus driving down prices just like in the commercial sector-really that much of a stretch?


Even with this cost information, there remains the question of quality vs. cost, the often difficult process of "shopping around" for additional opinions and prices, and many other issues that factor into what we are willing to pay and where we are willing to go for our health care. But the reveal of this information has forced honest conversation. Why does that procedure cost so much more at "Hospital A" than it does at "Hospital B" just down the street? Is it the quality of the care I will receive the same at either place? Am I willing to pay more for higher quality? These are not questions we have been able to ask before.


Simply empowering patients with the ability to perform cost/quality/benefit analyses for their health care decisions-even if they choose not to do so-is a step in the right direction. And who knows, with more big changes on the way, maybe our health care system is finally ready catch up with the rest of the developed world.

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