A new study of statewide charges for various medical procedures suggests that consumers should compare surgical prices in much the same way that they shop for homes, cars and other large-ticket expenditures.
When the median prices of 12 common surgeries were compared by the California Public Interest Research Group Education Fund, Bay Area hospitals were vastly more expensive than those elsewhere in the state. However, hospitals owned by Kaiser Permanente — which has locations throughout the Bay Area — were not included in data used to compile the report.
“There are times when you need medical assistance immediately, but the times when you can shop around … it definitely makes sense,” said Emily Rusch, state director of the CalPIRG Education Fund. “And in some cases, when you are in the Bay Area, you might want to go to the Central Valley.”
Surgical charges in San Mateo County were almost 220 percent of those in Orange County, and costs in San Francisco were 212 percent of those in Fresno. The median charge for disk removal — one procedure studied — ranged from as high as $98,406 in Santa Rosa to as low as $19,340 in Santa Barbara. Median prices in San Francisco were $55,659, or 129 percent of the statewide norm.
The report said neither patient income nor regional cost of living could explain the price disparities.
“Higher prices generally do not indicate better outcomes for patients, the presence of sicker or higher-risk patient populations, or even the provision of important societal services such as training doctors or caring for the vulnerable,” the report said. “In health care, higher prices often do not reflect greater value.”
The study compared sticker prices and not the amounts that patients actually paid. And for that reason, a spokeswoman for the California Hospital Association quarreled with the report’s premise.
“The notion of price-shopping is frankly a fallacy,” said association Vice President Jan Emerson-Shea. She said price shopping isn’t effective because many consumers are locked into relationships with particular hospitals, and because the cost of surgery includes not just hospital charges, but also bills from doctors, anesthesiologists and radiologists.
Peter Isaacson of San Francisco’s Castlight Health emphatically disagrees.
Isaacson said data from his company, which helps the employees of clients such as Honeywell and Kraft comparison shop for health care services, show price variations even within the same medical network of up to seven or 10 times higher for basic services such as MRIs or colonoscopies.
“There has been absolutely no transparency between price and quality for medical services, so it’s a completely inefficient market,” said Isaacson, Castlight’s chief marketing officer. Since consumers typically don’t know the cost of medical procedures until after the fact, Isaacson said it’s unsurprising that the laws of supply and demand don’t work in the same way as other industries.
But Daniela Uribe, a CalPIRG Education Fund fellow, said legislators should make hospitals disclose more information about their actual payments and discounts, both to help consumers shop around and to help policymakers better understand the regional variance in heath care costs.
Price to pay
A comparison of hospital charges shows that Bay Area prices are much higher than those in other parts of the state. The following figures show costs as a percentage of the state median:
Alameda County: 163
San Mateo County: 162
Contra Costa County: 151
San Jose: 138
Santa Rosa: 137
San Francisco: 127
Palm Springs/Rancho Mirage: 124
San Luis Obispo: 117
Santa Cruz: 108
Los Angeles: 105
San Diego: 89
San Bernardino: 85
Santa Barbara: 85
Orange County: 73
Source: “Your Price May Vary,” CalPIRG Education Fund report based on California Common Surgeries and Charges Comparison Database