Study: Philly-Area Hospitals Charge Wildly Different Prices for Same Treatment

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One of the most vexing things about the American health care system is costs. When making a large purchase like a house or car, most people do extensive research and understand where their money is going. But when it comes to surgery or treating a chronic disease, most patients have no idea what they’re paying for — and costs vary greatly from hospital to hospital.

A new study from the Pennsylvania Health Care Cost Containment Council (PHC4) attempts to shed some light on the subject.

Take diabetes for example. At Crozer Chester Medical Center, treatment costs $67,751 but just $22,535 at Chester County Hospital. Both vary widely from the state average of $27,907 and the Southeastern Pennsylvania average of $38,603.

There are many more cases. For an angioplasty or stent procedure to treat a heart attack (where a doctor opens a narrowed or blocked coronary arteries to restore blood flow) prices also vary from hospital to hospital. It costs $203,509 at the Hospital of the University of Pennsylvania but just $79,896 at Paoli Hospital.

And the list goes on. For infectious pneumonia, the average hospital charge is $86,195 at Hahnemann University Hospital but just $39,357 at Penn Presbyterian Medical Center.

In the 16 medical treatments examined in the PHC4 study, prices are vary greatly.

So what gives? PHC4 Executive Director Joseph Martin said it’s similar to the list price or sticker price on a car, meaning it eventually falls when the bill gets to a patient.

Medicare and Medicaid negotiate standard rates with hospitals because they’re very large payers, he said. “Hospitals often state that they are paid less than their costs by these two big government programs. So when they negotiate with private sector insurers, they attempt to ‘shift those ‘losses’ to the commercial side,” said Martin. “Contrary to Medicare and Medicaid, there are many different payment scenarios between hospitals and insurers.”

He says the charges play a factor in how these rates are negotiated.

“The contracted rate will almost always be quite a bit lower than the charged rate. The increase in people in high-deductible plans (with greater out-of-pocket responsibility for the consumer) has put some people at greater risk if they use a non-preferred provider, or are uninsured or underinsured,” said Martin. “In those instances, a hospital may choose to bill at full charges or a portion of charges, although most, if not all, hospitals have charity care programs that alleviate that to one degree or another.”

The study also found that, statewide, hospitals in Southeastern Pennsylvania had significantly higher 30-day readmission rates than the rest of the state for three conditions — the greatest difference occurring in chest pain (16.7 percent for Southeastern Pa. vs. 15.4 percent in the rest of the state.)

Southeastern Pa. had a significantly lower 30-day readmission rate on one condition, diabetes management (19.4 percent for Southeastern Pa. vs. 20.6 percent for the rest of state.)

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