Disparity in Costs of Surgical Procedures and its Impact

Healthcare costs in the United States are, and have historically been, much higher than the costs of healthcare in other developed countries – and it is not always because the quality of care is substantially better. As a matter of fact, Americans typically pay a lot more for healthcare than people in other countries without gaining higher-quality care or superior health. [1]

Part of the problem regarding healthcare costs is due to the patient’s inability to get a fixed price for a hospital procedure in advance, or even generally gather information about how much various hospitals charge for their procedures. At least, that used to be case before the federal government publicly released the ‘rate card’ prices (the full charge before insurance company discounts) hospitals throughout the US charge for the one hundred most common procedures and services. For the first time, although not surprisingly for many, outrageous hospital price disparities were revealed. One could thus learn that a simple joint replacement in the New York City area ran anywhere between $15,000 and $155,000. While this vast difference in pricing might partially be explained by variable labor rates, real estate prices, quality of physicians and staff, success rate, etc., these explanations fall flat when a procedure costs 10 times more in the same city, often on the same street and there is simply no economic explanation other than trying to maximize profits, or make up for losses that came from somewhere else. [2]

When the Centers for Medicare & Medicaid Services began releasing the data regarding hospital pricing in 2013, the hope was that by making the public more informed about the pricing of individual hospital providers, it would be easier for them to shop around, and thus naturally force the most expensive providers to lower their prices. [3] Unfortunately, this has not happened as of yet. For a lay person, the monstrous MS Excel data sheet is extremely difficult to navigate through. Unless a patient understands specific hospital procedures, Diagnostic Related Group codes and various additional charges, he or she will still be in the dark about the appropriate cost of a hospital procedure and thus unable to tell whether the hospital is charging them fairly or executing daylight robbery. [4] Additionally, even if patients wanted to shop around based on prices, they don’t always have the luxury of making a choice as many insurance plans include only a limited selection of the available providers.

With the development of self-funded health plans, it became more important to employers to know how much hospital providers charged for their services and what the actual costs were. Unfortunately, most organizations and employers under self-funded health plans face the same problem any other lay person would – even with the hospital charges and costs now being public, it is almost impossible to gather further details and more importantly, negotiate a fixed price for a surgical procedure with a hospital provider. That’s where BridgeHealth comes to the rescue.

BridgeHealth professionals have been helping organizations and their plan members negotiate and pre-determine bundled prices for various surgical procedures since 2007. With pre-negotiated case rate pricing, patients and their employers can find out the ultimate costs of surgical procedures and prepare for them accordingly, instead of taking a leap in the dark and waiting for the final bill in terror. BridgeHealth not only gives its clients more knowledge and decision power to control healthcare costs, but BridgeHealth only works with medical providers and hospitals in the top 25 percent nationally, so high quality medical care isn’t sacrificed.

1) Hospital Prices No Longer Secret As New Data Reveals Bewildering System, Staggering Cost Differences, The Huffington Post, http://www.huffingtonpost.com/2013/05/08/hospital-prices-cost-differences_n_3232678.html

2) The Great American Hospital Pricing Scam Exposed – We Now Know Why Healthcare Costs Are So Artificially High, Forbes, http://www.forbes.com/sites/rickungar/2013/05/08/the-great-american-hospital-pricing-scam-exposed-we-now-know-why-healthcare-costs-are-so-artificially-high/

3) Medicare Provider Utilization and Payment Data, Centers for Medicare & Medicaid Services, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/index.html

4) Disparity in Medical Billing, The Washington Post, http://www.washingtonpost.com/wp-srv/special/national/actual-cost-of-medical-care/