Better Information on Hospital Prices and Quality Will Help Make Health Insurance More Affordable

Imagine walking into an automobile dealer’s showroom, and when you ask the price of a car, they won’t tell you. They say you can’t find out the price until after you commit to buying the car, and moreover, you’ll have to pay for whatever options the dealer decides to include, whether you want them or not. There’s also no warranty on the cars they sell – if something doesn’t work properly, you’ll have to pay extra to have it fixed.

You’d undoubtedly shake your head in disgust and go to get your car elsewhere. But as bizarre as that sounds, it’s exactly the way our healthcare system works today. Many hospitals can’t or won’t tell you in advance what they’ll charge you for a procedure, they’re free to add on as many extra services as they want at your expense, and if they make a mistake or give you an infection, you have to pay extra to fix the problem, including paying for a second hospitalization if you have to be readmitted after discharge.

A study published in the Journal of the American Medical Association in February described what a researcher found when she called 122 hospitals around the country to find out what it would cost her healthy 62 year old grandmother to get a hip replacement. Nineteen of the hospitals were unable to give her any price information at all. For 27 other hospitals, she was only able to get the hospital’s price or the physician’s price, but not both. For about half (57) of the hospitals, she was able to get both the hospital’s price and the physician’s price, but only by calling them separately. Only 19 hospitals (16%) were able to give her a combined price for the hospital and physician services (both of which are obviously necessary if you need hip surgery).

It also turned out to be worth the effort she made to call and ask about prices. The combined hospital and physician prices ranged from $11,100 to a whopping $125,798 – a more than 10-fold difference. The lower prices weren’t coming from lower-quality hospitals, either; even among the hospitals on the highly-advertised U.S. News and World Report “Top Hospitals” list,” the prices ranged from $12,500 to $105,000, i.e., she might have to pay 8 times as much for the same procedure depending on which “top hospital” she chose.

Many other studies have found that when the veil of secrecy is removed from prices, tremendous variation across providers is revealed. It’s not just for major surgery, either; for example, the price of an MRI can range from several hundred dollars to several thousand dollars, depending on where you get it. Same test, huge differences in cost.

So if you’re uninsured, what you don’t know can hurt you financially. Even if you have health insurance, costs are going to start mattering more and more. A growing number of individuals now have high-deductible health plans, meaning they will pay 100% of the cost for many tests and outpatient procedures. Moreover, the ongoing battle between Highmark and UPMC may soon mean that many Pittsburghers will have to pay a higher percentage of the cost if the doctor or hospital they want to use is “out of network” for their health insurance plan. And regardless of what kind of health insurance you have, if people don’t start choosing the most cost-effective hospitals for their care, insurance premiums will continue to skyrocket.

Citizens, business leaders, and public officials should be demanding four things to ensure that all Pittsburghers can find the best quality hospital care at the most affordable price:

1. Hospitals Should Publicly Announce Their Prices for Tests and Procedures. 

Some progressive hospitals around the country put their prices right on their websites (for example, look at the website for the Spectrum Health system in Michigan at http://www.spectrumhealth.org/AveragePrices ). But you won’t find that on any hospital websites in the Pittsburgh Region. (Our hospitals’ websites tell you how to pay your bill, but not what your bill will be.)

Moreover, the published price should include all costs associated with the procedure, including all physician services and facility charges. Even for something as simple as a colonoscopy, a hospital can charge a lot more depending on what kind of anesthesia is used or where the procedure is done.

2. Hospitals Should Publish Detailed Statistics on Their Quality of Care. 

No one wants lower cost healthcare if it means poor quality care. Unfortunately, the quality of hospital care in the Pittsburgh Region is a lot worse than people realize. In fact, every large hospital in the Pittsburgh Region is going to be penalized financially by Medicare this year because of either poor quality care or high readmission rates (http://www.kaiserhealthnews.org/Stories/2012/December/21/value-based-purchasing-chart.aspx) . No Pittsburgh hospital appears on the just-released Truven Health list of Top 100 hospitals (http://100tophospitals.com/top-national-hospitals/) and even on the much-advertised U.S. News and World Report rankings (http://health.usnews.com/best-hospitals/rankings ) (which are driven heavily by physicians’ opinions of the hospitals’ reputation, rather than the objective data used for the Truven list) no Pittsburgh hospital is in the top 20 for cancer care (http://health.usnews.com/best-hospitals/rankings/cancer).

Some Pittsburgh Region hospitals have begun to put a limited number of statistics about the quality of their care on their websites, but most publish no information about their quality of care at all. In contrast, progressive hospitals like Beth Israel Deaconess in Boston (www.bidmc.org/Quality-and-Safety ) provide detailed information publicly about the quality of all aspects of the care they deliver.

3. Hospitals Should Offer a Warranty for Preventable Complications.

For several years, the Geisinger Health System in Central Pennsylvania has offered a “warranty” on services ranging from heart bypass surgery to maternity care (http://www.nytimes.com/2007/05/17/business/17quality.html?pagewanted=all&_r=0) . If you have a complication or if you have to be readmitted to the hospital for a problem related to your original procedure, Geisinger doesn’t charge extra the way other hospitals do. Studies have shown that the quality of care they deliver is now even higher than it was before, and their cost of care has also gone down because less money is being spent on treating complications.

Unfortunately, none of our hospitals in the Pittsburgh Region offer such a warranty. Medicare will be testing a new Bundled Payment program this summer that will pay for hospital care with a single, warrantied price (http://innovation.cms.gov/initiatives/Bundled-Payments/Participating-Health-Care-Facilities/index.html ), but only seven hospitals in our region volunteered to participate in this important new program (Allegheny General, Allegheny Valley, Canonsburg, Forbes, Indiana, Sharon, and West Penn).

4. A Consumer-Friendly Cost Comparison Website Should be Created. 

In many other states, either state government or the state hospital association has created a price comparison website that shows what all hospitals in the state charge for a wide range of procedures. (For example, look at the Wisconsin PricePoint system at www.wipricepoint.org and the New Hampshire Health Cost website at www.nhhealthcost.org ).

Unfortunately, nothing comparable exists in Pennsylvania. If you know where to look, you can find some information on the Pennsylvania Health Care Cost Containment Council (PHC4) website. The Council’s 2011 Hospital Performance Report for Western Pennsylvania (http://www.phc4.org/reports/hpr/11/docs/hpr2011west.pdf) shows average charges for a dozen common types of hospital admissions. It shows, for example, that the average hospital charge for laparoscopic gall bladder removal ranged from $13,383 at Uniontown Hospital to $55,202 at UPMC Presbyterian/Shadyside, despite having comparable mortality and readmission rates. However, these figures are just for what the hospital bills for the procedure, they do not include charges for the surgeon or other physicians involved in the case, so they underestimate what the total cost to a patient would be. More importantly, though, the report doesn’t include any information on the charges or payments made for common major procedures such as heart surgery or orthopedic surgery. The most recent information PHC4 published on cardiac surgery was for 2009 (http://www.phc4.org/reports/cabg/09/default.htm ); it showed that average hospital charges for cardiac bypass surgery ranged from$51,756 at Heritage Valley Beaver (with normal levels of mortality and readmissions) to $221,800 at UPMC Presbyterian/Shadyside (which had higher than expected readmissions), but that information is too old to be useful. The PHC4 report on orthopedic surgery (http://www.phc4.org/reports/ortho/ ) does not include information on the prices of surgery by hospital.

Although Pennsylvania was a national leader when it established the Pennsylvania Health Care Cost Containment Council (PHC4) 27 years ago, it has fallen behind many other states in making healthcare information available to the public. The Governor and General Assembly need to provide the funding and the mandate to PHC4 to publish timely, comprehensive information on the cost and quality of healthcare in the state.

(A version of this post appeared as the Regional Insights column in the Sunday, March 3, 2013 edition of the Pittsburgh Post-Gazette.