Large geographic cost gap among California hospitals

Hospitals in Northern California charge considerably more for their services than hospitals in Southern California, reports the Los Angeles Times.

The newspaper compared data from both regions of the state and concluded that hospitals in the six most populous counties in Northern California collect 56 percent more revenue per patient day than in Southern California's six most populous counties. In San Francisco County--which encompasses the city of San Francisco--hospitals receive $7,349 per patient day. In Los Angeles County, hospitals receive $4,389.

Although Northern California claims higher labor and supply costs, healthcare economists say consolidation spurred by industry giants such as Sutter Health--which controls one in five hospitals in Northern California--are behind much of the price disparity. Sutter does not operate in the southern half of the state.

"Consolidation definitely drives up prices," said Glenn Melnick, a healthcare economist at the University of Southern California. "This is a really serious problem."

As a result of the price disparities, insurers such as Aetna and Blue Shield of California say they charge 30 percent to 40 percent more in premiums for enrollees in Northern California than they do in Southern California.

For more:
- read the Los Angeles Times article
- read the Bloomberg article

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