Stark price differences between hospitals and outpatient settings

There is an often significant price difference between common procedures performed at hospitals versus at a physician's office or in outpatient surgery centers, according to two new studies.

One study, performed by the Center for Studying Health System Change and published by the National Institute for Health Care Reform (NIHCR), concluded that hospitals charged nearly three times more for some basic services, such as blood panels, compared to a physician's office.

That study used insurance claims data from 590,000 retired autoworkers and their dependents. It concluded that hospitals performing basic blood tests for those patients charged on average $37 for the service, versus $13 in a physician's office or an outpatient setting. The cost differential for a colonoscopy was similar: It cost an average of $1,383 in a hospital, but $625 in a clinic. An MRI that cost $900 on average in a hospital setting cost about $600 in an outpatient setting.

According to the study, there were no significant differences in the health of patients who underwent colonoscopies or MRIs in the outpatient versus the inpatient settings, dispelling the notion that hospitals have to charge higher prices because they treat sicker patients.

Ambulatory surgical centers often had lower prices for procedures compared to hospitals, particularly in states that required fee schedules for care, another study released by the Workers' Compensation Research Institute (WCRI) concluded.

The NIHCR study recommended the use of narrower provider networks, tiered provider networks and the use of reference pricing in order to help bring the cost differential down. Reference pricing, wherein payers cap costs at a certain dollar amount and make patients responsible for the excess, has proven effective in cutting costs for surgeries, a recent study by the California Public Employees Retirement System (CalPERS) has shown. CalPERS saved $5.5 million over a couple years by using reference pricing for some surgeries.

To Learn More:
- read the NIHCR study (.pdf)
- check out the WCRI study abstract