California prices vary widely, study says, not surprisingly

Filed Under: Costs, Patients, Providers

Sticker prices for surgical procedures vary widely, with charges for a Caesarean section ranging from $12,972 to $41,833, according to a new study by the the California Public Interest Research Group, according to an article in The Sacramento Bee.

“A group of public-interest researchers took on the veiled, confounding world of hospital pricing Thursday in a report that questioned why a common surgery cost $40,000 at one hospital in the Sacramento region and $17,000 at another,” Cynthia H. Craft wrote in the article.

“Pressing for more transparency in hospital pricing, the study by the California Public Interest Research Group, a consumer watchdog organization, spotlighted wide disparities in the cost of surgeries statewide.”

The study ranges across the state. using publicly reported charge information. Of course, what the hospitals actually get paid is a different matter; the price on the bill a hospital gives to either a patient or a payer (insurance company) often has little to do with what the hospital actually receives, which is referred to as the “negotiated rate” because it is reached by a negotiation between provider and payer.

The authors of the study note: “Hospitals with greater market power can charge more. When dealing with insurers, for example, hospitals that serve the most patients and that are part of large hospital networks have more leverage when negotiating with health insurers on prices, who are willing to pay more to retain a key health care provider in their network.”

Even if the prices are only notional and do not relate to exactly how much is paid, it’s clear that the rising costs — especially for people who are not on insurance plans and therefore can’t get a negotiated rate — have all kinds of repercussions.

“Employers who provide insurance to their employees now spend 12 percent of employee compensation costs providing health insurance,” the study adds. “Growing health care costs have added to the financial troubles of government: California spent 19 percent of its general fund monies on health care in 2009.”