It’s well known that different grocery stores, movie theatres, and hospitals all charge slightly varying rates for the same item. A $3.00 difference in a movie ticket is one thing, but when certain hospitals in the U.S. are charging $10,169 for a simple cholesterol panel blood test while others are charging merely $10, we might have a national problem on our hands.
According to a new study published in the journal BMJ Open, researchers found that there was a thousand-fold difference in cholesterol panel cost and obscenely large gaps in other medical procedure costs, such as a basic metabolic test, which ranged between $35 and $7,303. “I was expecting a little variation, maybe two-fold, or even three-fold,” said Dr. Renee Hsia, author of the study and associate professor of emergency medicine at the University of California, San Francisco, according to Time. “But I wasn’t expecting that much.” Blood tests, which are automated and thus pretty much the same at every hospital, “should be like buying a loaf of bread,” Hsia said, with only a small variation in cost.
This information isn’t entirely new. Reports in the past have shown, for example, that a hospital in Livingston, New Jersey charged an average of about $70,712 to implant a pacemaker, while a hospital in Rahway, New Jersey charged up to $101,945 for the same exact procedure. Hospitals have been charging Medicare enormously different amounts for the same procedure.
All in all, hospital prices can be pretty random. The hospital that charged over $10,000 for the cholesterol panel wasn’t the same one with the metabolic test price tag of over $7,000. Many hospital administrators don’t even quite know themselves how these prices are set. Some have admitted in recent years that supply, demand, or overhead costs aren’t always factored into some of these prices, according to Time. Other hospitals claim that since they are teaching hospitals, they have a higher cost structure. But this is why a hospital in one state can charge up to a thousand times more than a hospital in another state for a fairly simple and automated procedure, with patients often oblivious to the gap.
Even though former Secretary of Health and Human Services (HHS) Kathleen Sebelius released, in 2013, the prices of the 100 most common inpatient services at hospitals in the U.S. to increase transparency in hospital billing, the process continues to be scattered.
“When people hear about price variation, they say it’s probably just one hospital, or one blood test or one procedure, and they think it’s the exception rather than the rule,” Hsia said. “It’s not a hospital issue, it’s a fundamental problem because there is not a rational way to determine hospital pricing, and that needs to be addressed.”
Source: Hsia R, Antwi Y, Nath J. Variation in charges for 10 common blood tests in California hospitals: a cross-sectional analysis. BMJ Open. 2014.