Hospital pricing increasingly convoluted

While rising hospital prices have consumers calling for improved pricing transparency, some healthcare leaders say the high charges are necessary to offset the cost of uncompensated care and providing quality services, according to a New York Times column.

At many hospitals in the U.S., emergency rooms are "profit centers," writes columnist Elisabeth Rosenthal, hence the high price of a procedure as simple as getting stiches. For example, she writes, a 22-year-old student from Port Huron, Mich., was billed nearly $3,000 when she needed six stitches after she tripped while running. "Insurers and patients negotiated lower prices," she writes, "but those charges were a starting point."

Although pricing may seem overly complicated, hospitals have valid reasons for charging what they do, Warren Browner, M.D., CEO of California Pacific Medical Center told Rosenthal. Hospitals, he said, must have trained professionals available at all hours, and regulations and patient expectations mean they must regularly upgrade both equipment and buildings. Patients with insurance or who are better equipped to pay are charged more to offset the cost of uncompensated care to the hospitals, he said.

"Hospital care is extremely expensive to produce and to have available for everyone in the community," he told the Times. "We take every penny of the revenue we earn and use it to build new and better facilities for everyone in the city."

Adding to the complication of hospital prices, many facilites are reticent to disclose the cost of services, according to a study published in JAMA Internal Medicine. The researchers, Joseph Bernstein. M.D., of the University of Pennsylvania's department of orthopaedic surgery, and Jillian R.H. Bernstein, a high school student in Haverford, Penn., called 20 hospitals in the Philadelphia area to inquire about the out-of-pocket price of an electrocardiogram. Only three of the hospitals were able to give them a definite answer, but 19 of the hospitals were able to answer their questions about the price of parking.

"Hospitals seem able to provide prices when they want to; yet for even basic medical services, prices remain opaque," Bernstein and Bernstein wrote. "Accordingly, medical insurance payment schemes that promote concern about prices without a commensurate increase in price transparency are apt to be ineffective."

Pricing transparency is a priority for both patients and providers. A November survey found that patients are increasingly turning to insurers and healthcare providers to provide accurate information on the costs of treatment and procedures, FierceHealthcare previously reported.

To learn more:
- here's the NYT column
- read the study

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