Transparency is the cure for health care cost confusion

Jennifer Hemmingsen
Published: February 20 2013 | 11:01 am - Updated: 28 March 2014 | 11:36 am in

Buying a new car? Check the manufacturer’s suggested retail price.

Want your kitchen remodeled? Get an estimate of the cost.

Before you sign your name on a mortgage, the lender must describe to the penny every charge you’re on the hook for.

There are even laws demanding funeral directors be upfront and transparent about their fees.

But if you have to go to the hospital, good luck figuring out what they’re going to charge you — or what a fair price even is. If you can think of any other product and service where pricing is so confusing — so seemingly arbitrary — I’d like to hear about it.

A team of researchers with University of Iowa Health Care and Iowa City VA Health Care System set out to learn what it would cost for a healthy 62-year-old woman to pay for a routine hip replacement. They called two hospitals in every state and the District of Columbia, plus the 20 top-ranked orthopedic hospitals in the country, pretending to be calling on behalf of their uninsured grandmother, who wanted to pay for the procedure herself.

And even though there’s been plenty of talk about the need for greater transparency in health care costs, four out of 10 of the top-ranked hospitals — 36 percent of the surveyed hospitals, overall — couldn’t, or wouldn’t, give a cost estimate for the common procedure.

Nine of the top-ranked hospitals were able to provide complete pricing information, but only 10 of the study’s randomly selected hospitals could, according to findings published this month by the Journal of the American Medical Association’s internal medicine publication. For three of the top-rated hospitals and about half of the rest, researchers had to track down separate estimates from physicians to get a total idea of the cost.

A lot of hospitals seemed confused by the question, researchers reported. They bounced the inquiry around from department to department. The figures they eventually came up with: Anywhere from $11,000 to $126,000. Quite a spread.

Researchers couldn’t find any rhyme or reason for the discrepancies. The cost at top-rated hospitals ranged from $12,500 to $105,000. The other hospitals quoted prices from $11,100 to $125,798. Medicare and large insurers usually pay between $10,000 and $25,000 for similar surgeries, researchers note. A bit of cost difference makes sense — even a fast-food hamburger costs more in some places. But $100,000 bump?

Of course, patients always could shop around for the best price — if they’ve got a lot of time on their hands and are willing to travel for a deal. But requiring true cost transparency seems a much more efficient way to bring some sanity to health care pricing and protect the vulnerable consumers who are paying. Just as it does in nearly any other purchase that we make.

Comments: (319) 339-3154; jennifer.hemmingsen@sourcemedia.net

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