At this point, everyone knows there’s no standard price for medical procedures including a stent placement, appendectomy or total hip replacement, but how much hospitals charge actually varies widely by geographic area, according to a recent report by Government Accountability Office.
The Committee on Energy and Commerce commissioned the study to understand how high quality care can be provided while maintaining or lowering current spending levels, according to the report released last month.
The GAO compared spending on three procedures: coronary stent placement, laparoscopic appendectomy; and total hip replacement. The GAO found that cities with the highest or lowest prices for one procedure tended to follow this trend on all three.
Salinas, California topped spending for all three procedures: $60,375 for a coronary stent placement; $57,990 for a total hip replacement; and $25,924 for a laparoscopic appendectomy, according to the report.
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Cities with the lowest spending for the respective procedures were Huntsville, Alabama, $14,448 for a coronary stent placement; Youngstown-Warren-Boardman Ohio-Pennsylvania, $19,164 for total hip replacement; and Joplin, Missouri, $6,166 for a laparoscopic appendectomy.
Salinas and Fort Wayne, Indiana, were among the highest-spending areas for all three procedures, while Hartford, Connecticut and Youngstown, Ohio, were among the lowest-spending, the report stated.
The study adjusted for geographic differences in the cost of doing business, enrollee demographics and health status.
The report found the price of the initial hospital stay accounted for more than 80 percent of the variation in overall spending, because that represented the largest percentage of spending.
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The comparisons were for average adjusted episode spending, including services from the day of admission to 30 days after discharge and certain services in the three days prior to admission.
The three procedures studied are high volume, being among the 20 with the most discharges in 2009.
The report did not name hospitals, but compared an estimated 150 cities with populations of 50,000 or more.
These researchers noted that reasons for higher-priced hospitals in some areas included their provision of specialized service lines that other nearby hospitals did not offer, being part of a local hospital system with greater bargaining clout, having unusually good clinical reputations, and being part of a large teaching hospital.
High- or low-spending areas were not concentrated in particular regions of the nation.
The highest-priced metropolitan areas had average adjusted episode spending that was 74 to 94 percent higher than those areas of lowest spending, depending on the procedure, according to the report.
The GAO examined variation in private sector healthcare spending, an area in which little research has been done though it represents a third of overall healthcare spending, according to the GAO report. The findings are based on 2009 and 2010 databases, and do not reflect the effect of more recent policy changes such as the Affordable Care Act, the report notes.
In a letter to Henry A. Waxman, Ranking Member Committee on Energy and Commerce House of Representatives, the GAO said national health expenditures are projected to grow from $2.8 trillion in 2012 to over $5 trillion in 2023, outpacing gross domestic product and accounting for almost 20 percent of GDP by 2023.
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The United States spends significantly more on healthcare than any other nation, yet health outcomes in the United States are not necessarily better than those of other nations with lower spending, the letter stated. Studies have also shown that higher spending is not always associated with better quality of care, it said.
Here’s how the markets compared for prices of total hip replacements, according to data from Blue Cross Blue Shoeld. Click the column headings to sort by different figures: