Hospital pricing and transparency: Is change on the way?

January 12th, 2015

It used to be aspirin. The price tag attached to each little white pill was the standard unit of outrage among those decrying the high cost of hospital care. Now, thanks to the New York Times, maybe outrage will be measured in stitches.

In case you haven’t read the piece, it gives multiple examples of emergency departments charging hundreds of dollars per stitch – examples that seem meant to illustrate a larger picture of hospital pricing disconnected from market forces or real-world expenses.

According to the article, “The main reason for high hospital costs in the United States, economists say, is fiscal, not medical: Hospitals are the most powerful players in a health care system that has little or no price regulation in the private market.”

It suggests later that healthcare consolidation may serve to increase the power of hospitals, stating, “Indeed, research shows that today’s hospital mergers tend to drive up prices.”

Meanwhile, in research just published in JAMA Internal Medicine, a clever pair of researchers found that it was much easier to find out the cost of parking at 20 hospitals around Philadelphia than it was to find out how much those hospitals charge for an electrocardiogram. Basically, one of them just cold-called the hospitals, said she wanted to pay cash to have an ECG done, and asked someone in the right department how much that would cost. Then she made a second round of calls to ask about the cost of parking. Nineteen of the 20 hospitals answered the parking question, but “a price for an ECG could be obtained from only 3.” Those three prices? $137, $600, and $1,200 respectively.

The researchers note that they were building on other recent research (covered here in Hospital Report earlier this year) that tried to get pricing information on hip replacements.

They conclude, “Hospitals seem able to provide prices when they want to; yet for even basic medical services, prices remain opaque. Accordingly, medical insurance payment schemes that promote concern about prices without a commensurate increase in price transparency are apt to be ineffective.”

Agreed, but cool little studies like this are a good first step in promoting transparency. What remains to be seen is whether a greater awareness of the wide disparities and seemingly arbitrary nature of hospital pricing will actually prompt change.