Big Differences in Health Care Costs

Big Differences in Health Care Costs Click to Enlarge Photo: KNSI News

(KNSI) - A new report from the Minnesota Department of Health shows large price differences in health care costs from one hospital to another, and even wild swings in pricing from one patient to another in the same hospital.

A patient undergoing one of four common procedures: spinal fusion surgery, major bowel surgery, appendectomy and removal of uterine fibroids, may pay between two and seven times as much as another patient at the same hospital.

The report says this can mean differences of $7000 and $70,000 dollars.

Researchers studied prices paid between July 2014 and June 2015.

Pricing for the most expensive of the four – spinal fusion surgery and major bowel surgery – varied by three fold or more within hospitals. Even hospitals with lower than average pricing showed large variations in cost.

Health Commissioner Jan Malcom says, “This degree of variation shows that the health care market lacks meaningful transparency and a consistent link between cost and prices. This undermines effective competition and rational pricing of health care services, and contributes to the cost pressure that families and businesses are experiencing. Shedding light on prices is a step in the right direction toward a better functioning market where individuals and employers can play a stronger role as informed consumers.”

The research was not designed to show what is causing the differences within and between hospitals. Likely factors include differences in labor markets, operating costs, hospital and patient characteristics, and practice styles.

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