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U.S. releases data showing striking differences in hospital prices

Dan Gorenstein May 8, 2013
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The government released some new numbers today, how much every hospital in the country charges for the 100 most common procedures. In an easy-to-use database that lets you and me, for the first time, look inside hospital pricing.

And there are big differences.

One example: In Birmingham, Ala., one hospital’s average charge for a joint replacement was $20,000, a neighboring hospital down the road averaged $140,000.

Federal health officials hope this new information will pressure hospitals to standardize prices.

Dartmouth-Hitchcock health system CEO Jim Weinstein, for one, is pleased.

“I was kind of happy to see we were finally getting some transparency,” he says.

Weinstein says it’s a shame patients often know more about their breakfast cereal than the cost of their health care. But he says not all hospital executives feel the same.

“This is threatening to people to have data out that maybe shows the difference in charges and payments and having that public will force change,” he says.

That’s exactly what federal health officials want to hear.

The Centers for Medicare and Medicaid released what until now has been sensitive, proprietary information — the average price at every hospital for everything from treating pneumonia, to implanting a pacemaker.  

The head of Medicare, Jonathan Blum, believes arming consumers is one way to force hospitals hand on pricing.

“Really our goal is to ask questions in a much more public conversation, why there is so much variation,” he says.

Now, this data — which totals more than 17,000 pages if you print it out — tells only part of the story. It doesn’t tell you what most people actually pay; health insurers negotiate big discounts off these prices. It also doesn’t tell you anything about whether the money you spent on your heart surgery was good value.

But Bob Kocher, a former Obama health adviser, says it’s still essential.

“It’s the first time we now have for all common procedures some price point at which we can begin to have the market evaluate hospitals and move market share,” he says.

Will airing all this information force hospitals to change their prices?

Health people I spoke to say no.

Does it shift the conversation, putting more attention on hospital pricing? Yes.

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