Hospitals’ Prices for Common Services on the Rise; Vascular and Chest-Pain Treatments Show Some of Biggest Upticks

Hospitals’ Prices for Common Services on the Rise

Vascular and Chest-Pain Treatments Show Some of Biggest Upticks


June 2, 2014 7:58 p.m. ET

WASHINGTON—Federal data released Monday show an increase in the average price hospitals charge to treat common conditions, with vascular procedures and chest-pain treatment showing some of biggest upticks.

The numbers from the Centers for Medicare and Medicaid Services include 2012 prices at 3,376 hospitals for the 100 most-common inpatient stays by Medicare patients. It is the second year the agency has released such data, and it reflects $57 billion in payments from Medicare, the federal insurance program for the elderly and disabled.

The data show what each hospital charges on average for individual services alongside the typically much lower rates Medicare actually pays, based on a set schedule of fees. Private insurers also negotiate their own reduced amount.

However, the charge amounts can impact consumers because they can mark the starting point for private insurers’ negotiated rates, and the uninsured can get saddled with charges that aren’t discounted in the same way. Moreover, hospitals and other health providers that don’t belong to insurers’ networks sometimes bill people with private coverage for the balance of charges insurers don’t cover.

More broadly, the data offer a window into wide variations charged by different hospitals for the same procedure. For example, in the Contra Costa County region of California, Kaiser Permanente’s Antioch hospital charged $46,374 for joint-replacement services, while the highest-priced hospital in the area, NorthBay Medical Center in Fairfield, charged more than triple the price, at $150,953.

NorthBay didn’t immediately respond to a request for comment. A spokeswoman for Kaiser said the company couldn’t offer immediate comment.

“We pay wildly different costs for the same thing even when there’s no difference in quality,” said Suzanne Delbanco, executive director of the Catalyst for Payment Reform, a nonprofit that works for employers. “It opens your eyes to the fact that there’s huge variation in charges for the same services.”

From 2011 to 2012, the median hospital price increase for 100 common service types included in the data was almost 5%.

Nationwide, the prices for certain vascular procedures rose 10%, to $50,863 in 2012 from $46,399 in 2011—one of the biggest jumps. The list price for treating chest pain rose 10%, too, to $18,676 from about $17,000. Services that saw the lowest changes—a 1% increase—include treatment related to cellulitis, red-blood-cell disorder, and kidney and urinary-tract ailments.

Around the nation, the amounts hospitals charge vary significantly. The average charges for services linked to any patient discharge included in Medicare’s data rose 24% in Muncie, Ind., to $41,177 in 2012 from $33,168 in 2011. At hospitals in Johnstown, Pa., the average charges dropped nearly 5% to about $19,508 in 2012 from $20,451 in 2011.

Such variations can be due to labor costs, patient mix and whether hospitals charge more to subsidize neonatal intensive care or trauma centers, said Caroline Steinberg, vice president of trends analysis at the American Hospital Association.

Also, the amounts Medicare pays for services varies based on location and procedure.

Joint-replacement admissions remained hospitals’ highest-cost service for Medicare, accounting for $5.2 billion in payments from the federal program, not including the portion of fees beneficiaries are responsible for paying.

The lowest average list prices for major joint-replacement procedures are in the Baltimore area, where in 2012 the typical hospital charged a little less than $23,000. The most expensive place for the same services is Contra Costa County, Calif., where joint-replacement hospitalizations run an average of about $133,000.

Even in the Baltimore area, there was wide variation. Prices for major joint replacements at 22 Baltimore-area hospitals ranged from a low of $15,900 at Saint Joseph Medical Center in Towson to $42,371 at Johns Hopkins Hospital.

A spokeswoman for Saint Joseph said hospital charges in Maryland are all set by a state commission and based on a variety of factors. A spokesman for Johns Hopkins wasn’t able to provide comment immediately.

The CMS is focusing on curbing prices and getting hospitals to report more information on costs to the public. Hospital administrators dismiss list prices as misleading given that most people don’t actually pay them.

“It could be misleading because the data is really anachronistic and doesn’t reflect what the hospital is paid,” said Chip Kahn, president and chief executive officer at the Federation of American Hospitals.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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