Price variation among hospitals hurts patients

There is an enormous variation in prices for identical healthcare services in Massachusetts, a finding that worried members of a special commission that studies the Bay State's healthcare policies.

The report by the Massachusetts Health Policy Commission concluded that higher prices are not correlated with higher quality. It also found that the huge variation in prices drove overall healthcare costs up.

"Price variation has a significant impact on total spending not only because some providers receive far higher prices than others for the same sets of services, but also because the providers with high prices tend to have high volume," the report said.

Among the starker variations: A low-risk maternal delivery cost $9,000 at Heywood Hospital, a 134-bed non-profit community-owned hospital in Gardner, versus $16,000 at North Shore Medical Center, a member of Partners HealthCare and based in Salem.

Moreover, the variations also cost individual patients more money due to the trend of insurers shifting cost to patients. 

"While some variation in prices is warranted to support activities, unwarranted variation in prices--combined with a large share of volume at those higher-priced institutions--leads to higher spending overall and inequities in our distribution of resources," Commission Executive Director David Seltz told WBUR.

In 2010, hospital costs in Massachusetts were among the highest in the U.S., running about 55 percent higher than the nationwide average. And studies have shown that hospitals operating in the state that charge more for services tend to get more revenue than their lower-priced competitors.

The report suggested that legislators or other policymakers take actions to try and address the issue. Among the recommendations: advancement of alternative payment methods and a value-based market.

A branch of the Service Employees International Union is pushing a ballot initiative that would create a rigid zone of how much reimbursements to providers can differ.

To learn more:
- read the report (.pdf)
- check out the WBUR article

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