Perplexed about the cost of medical care? Roni Caryn Rabin, writing for Kaiser Health News, revealed that one California hospital charged $10 for a blood cholesterol test while another hospital in the same state ran the same test and charged $10, 169 for it. That was 1, 000 times more. Another common test, the basic metabolic panel, was billed at charges ranging from $35 to $7, 303.
Crazy Pricing In California Hospitals
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Rabin revealed the wide disparity in charges for routine blood tests performed in California hospitals in a report on a study in 2011 published in the August issue of BMJ Open. She quoted Renee Hsia, M.D., MSc, the paper’s lead author, an associate professor of emergency medicine at University of California San Francisco, as saying, “People say our healthcare system needs to be more marketplace-driven, but the charging system and payment system are irrational. When people try to understand why prices are the way they are we have no ability to explain it. That is the take-home message. That is what is so disturbing.”
Officials of the California Hospital Association were unimpressed with the report. Rabin quoted Ian Emerson Shea, the association’s vice president, as saying that patients pay discounted rates based on discounts negotiated by their insurance companies. “Charges are meaningless data—virtually no one pays charges, ” she said.
Hsia did not back down. She pointed out that manufacturers of automobiles know down to the last few pennies how much it costs to make an automobile. She claimed that hospital CEO’s do not know how much an appendicitis case costs in their own institutions. “They have never been asked to determine prices that way, ” she told Rabin.
The most extreme disparities in charges were for cholesterol tests but they were not unusual. Charges for a complete blood cell count and a thyroid stimulating hormone assay ranged from as low as $20 in some hospitals to as much as $7, 439 and $8, 392 in others. The lowest prices were found in teaching and government hospitals. The researchers reported that they found no rational explanation for the wide variation in listed prices.
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This is a fascinating development. In my practice we've seen similar outcomes with the revised protocol. The key differentiator seems to be patient selection criteria. Has anyone else noticed the correlation with BMI thresholds?
Great point. I'd push back slightly on the conclusion, the sample size in the cited study is too small to draw population-level inferences. That said, the directional signal is compelling and worth a larger RCT.
We implemented a similar approach last year. Early results are promising but we're still gathering 12-month follow-up data. Happy to share our protocol if anyone is interested.
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