Why Does it Cost So Much More to Have a Baby in Some Places Than Others?
Hospital charges for labor and delivery vary so widely from one California medical center to another that some facilities charge women eight to 11 times more than others, according to a new study.
Comparing nearly 110,000 uncomplicated births and Caesarean sections, researchers found the lowest charge for a vaginal birth involving an average woman was $3,296, while the highest was $37,227.
For an uncomplicated Caesarean delivery, the lowest charge was about $8,312, while the highest was $70,908.
The hospital charges – which did not include physician fees or charges for the baby’s care – were adjusted to compare patients with similar profiles who were of the same age and hospitalized for the same amount of time, the authors said. Estimated discounts paid by insurers were, on average, 37 percent of the charges.
“Health care pricing is kind of like the Wild West,” said Dr. Renee Y. Hsia, the paper’s lead author, an associate professor of emergency medicine at University California San Francisco and a Robert Wood Johnson Foundation physician faculty scholar.
“There is no real system of health care pricing. The ‘system’ is that hospitals are allowed to charge whatever they want and whatever they feel they merit.”
The study is being published in the Jan. 16 issue of BMJ Open, an online medical journal.
In the course of their research, the authors analyzed data on births in 2011 at 195 hospitals among women with private health insurance.
Private insurers rarely pay full hospital charges because they negotiate discounts with providers in their networks. Researchers estimated discount rates using a formula because insurers and providers guard their actual payment rates as proprietary.
Uninsured patients are billed for the full charges, as are insured patients who go out of network, Dr. Hsia noted.
High hospital charges may mean insured patients incur higher out of pocket costs, and they often form the base for the discounts that insurers negotiate. As such, they play a role in driving up health insurance premiums.
The researchers found that hospitals charged more if they were located in areas with a higher cost of living, treated sicker populations or were for-profit institutions.
But the differences in hospital characteristics only explained about a third of the difference in the charges, the authors said.
Although some states including California have laws that aim to force transparency in hospital pricing, it is extremely difficult for patients to shop around and compare hospital charges. A study published in the Journal of General Internal Medicine in 2010 reported that less than a third of hospitals responded to letters requesting estimates for prices of common procedures.
Dr. Hsia said the new study focused on childbirth because it is the most common cause of hospitalization in the United States, but the variation in charges is not unique to delivery by any means. An earlier study by Dr. Hsia published in Archives of Internal Medicine in 2012 found that charges for a routine appendectomy in California ranged from as low as $1,500 to as high as $182,955.
“It’s not an exception, it’s the rule in the United States,” she said.