Similar Procedures, Different Prices at California Hospitals

The cost of many hospital services varies widely across the state — with some facilities charging two or three times as much for a similar procedure, according to a report released yesterday by the California Public Interest Research Group.

Higher cost at one hospital doesn’t necessarily mean higher quality, according to Pedro Morillas, CalPIRG’s legislative director.

“Just because a specific hospital charges an arm and a leg doesn’t mean you’ll get better care there,” Morillas said. “Cost is not a corollary for better quality.”

The report, “Your Price May Vary: Geographic Variation in Hospital Charges in California,” said that some cost disparities could be attributed to regional differences — such as the $144,900 price tag for angioplasty in the San Jose area, compared to a charge of $44,400 for the same thing in Bakersfield.

Surgery in the San Mateo and Alameda County areas were up to 2.7 times higher than surgery in Fresno and Orange counties, the report said.

Generally, higher income levels near hospitals did not seem to be directly related to higher costs, Morillas said. “The report has found there is a bigger correlation between market forces,” he said. “When you have bigger demand from patients, you’re able to charge more for procedures. That is, when they’re a high-demand hospital.”

Consumers don’t know how to compare hospital care, Morillas said, “because hospitals are not required to report outcomes, they’re only required to report cost.” And those costs vary widely, he said, in part because those price tags are only what hospitals charge, before they negotiate the real charge with insurance companies.

“Policy makers need more information, to know how much providing health care actually costs,” Morillas said. “Real cost and quality need to be accessible to consumers.”

Morillas said the state’s health benefit exchange, slated to open in 2014, eventually might provide aggregate quality and cost information.  

“Right now the information isn’t being collected in a comprehensive enough way to get an accurate picture of what these procedures should cost,” Morillas said. “The exchange will have an opportunity to collect a lot of this data. They could get a lot of this information in a uniform, comprehensive way.”

Some of that information could also be gathered and compiled by the California Office of Statewide Health Planning and Development (OSHPD), Morillas said.

Related Topics

Capitol Desk