Cost Of Medical Procedures Varies Widely Across U.S.
Across the country, the price of a gallon of milk from market to market is fairly constant. The same goes for cars and most other consumer products. But what about medical procedures? A team out of the University of Iowa called 120 hospitals across the country to compare the cost of a hip replacement paid out of pocket — and found wild variation in price. Robert Siegel talks with two members of the research team, Peter Cram and Jamie Rosenthal, about their findings.
ROBERT SIEGEL, HOST:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
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Here's an experiment. Call up dozens of hospitals all over the country. Tell them your grandmother needs a hip replacement and ask: How much will it cost? The answers are stunning. If you can manage to get an answer, it might range anywhere from $11,000 to 125,000. This very experiment was described in an article published online yesterday by the Journal of the American Medical Association, the Internal Medicine edition.
SIEGEL: Joining us now are two of the authors: Dr. Peter Cram, a University of Iowa internist who does research on access to and delivery of medical care. Welcome to the program, Dr. Cram.
DR. PETER CRAM: Thank you.
SIEGEL: And Dr. Cram's former summer research assistant Jaime Rosenthal who's a senior at Washington University in Saint Louis. Welcome to the program.
JAIME ROSENTHAL: Thank you.
SIEGEL: And, Dr. Cram, before we hear Jamie do her best helpful, inquiring granddaughter, tell us in a nutshell what question you were hoping to answer in this study.
CRAM: Sure. So transparency is all the buzzword these days. And in healthcare, transparent quality data is readily available on the Internet. But transparency in pricing is much less certain. We wanted to see whether we could get data on pricing of one common procedure, and that is total hip replacement, and see if we could get this data.
SIEGEL: OK. Jamie Rosenthal, I'm a hospital. You call me up, and what's the question?
ROSENTHAL: Well, first, I'd tell you my name is Emily Miller. And then I say: My grandmother is a 62-year-old woman. She doesn't have insurance, but she's been seen by several doctors, and they say that she needs a hip replacement. And we are wondering what the procedure would cost.
SIEGEL: She doesn't have insurance, but she's not Medicare eligible...
SIEGEL: ...because she is under 65. But also, she's going to pay out of pocket for this?
SIEGEL: Uh-huh. And how many hospitals did you call all up and put this hypothetical to?
ROSENTHAL: It was 120 total, 20 top-ranked from the U.S. News reports in rankings, and then 100 randomly selected hospital.
SIEGEL: And were you surprised by the range of answers you were getting?
ROSENTHAL: Yes. At first, I didn't really know what to expect or what I was getting into. And then when I started calling hospitals, I felt like I was just writing down random numbers because the prices varied so much. And it was very surprising.
SIEGEL: Well, Peter Cram, you said you were examining the issue of transparency here. Instead, the hospital system seems to be fairly opaque. But you would say there was a glass half full/half empty here that you discovered. Very well, first of all, what was half empty about the glass?
CRAM: Well, the half empty was that 40 percent of the hospitals that we sampled could not give us a price estimate for the total hip replacement. But on the other hand, the glass half full - and I really like the glass half-full story here - is that 60 percent of the hospitals, with a little bit of leg work on behalf of Jamie, were able to give us a price estimate. And some of those prices were actually darn reasonable - 20, 25, $30,000 - and some of these were the top orthopedic hospitals in the country.
And I think that that's an encouraging story for people who are out and want to do some comparison shopping.
SIEGEL: So the correlation between how highly ranked the hospital was for orthopedics and what they charge with the total hip replacement, the correlation isn't there, I gather, is what you're saying.
CRAM: We actually looked at that, and the answer is not so much. So there were good, highly ranked hospitals, best thought of hospitals in the country that gave us very good prices. There were other hospitals that were not top-ranked that gave us very high prices. So no real pattern.
SIEGEL: But when you talk about $20,000 and $120,000, are those the outliers? And was there some cluster somewhere near the middle in which the majority of the hospitals are within, you know, 10 or $15,000 of one another, or are they just randomly spread across that scale?
CRAM: Well, the average price was obviously somewhere in the middle. But, you know, I always go back to the analogy of buying a car. And when people go out and they buy a Honda Civic, if one car dealer quotes them $22,000 and another quotes them 25 - all things being equal - you're going to go to the dealer that charges you 22.
And so, you know, I really think that one of the messages for insurance companies, policymakers and patients is there are bargains to be had at some of America's best hospitals.
SIEGEL: Jamie, did you ever have the urge to call up some $80,000-hospital and say: I got seven hospitals here under 50. What's the matter with you guys? What are you charging for?
ROSENTHAL: I did want to, but I kind of ran out of time with that aspect of it.
SIEGEL: You did, OK.
SIEGEL: Well, Jaime Rosenthal in St. Louis and Dr. Peter Cram in Iowa City, thanks to both of you for talking with us.
ROSENTHAL: Thank you.
CRAM: Thank you very much.
SIEGEL: That's professor of internal medicine Peter Cram and this summer research assistant Jaime Rosenthal. They studied how easy or hard it was to get price quotes from hospitals for a hip replacement.
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