Appendectomies are commonly performed operations, and you would expect to pay virtually the same price regardless of where in the United States you had the surgery. Right?
A study by CBS News revealed interesting statistics about the disparity in costs for common surgical procedures across the country. The findings were similar to the results from a study conducted in 66 hospitals in the United States and Canada, which indicated a wide range of charges depending on geographic location.
A California study funded by the Robert Wood Johnson Foundation revealed that the average cost of an appendectomy was around $33,000, but the extremes ranged from under $2,000 for a patient in a rural northern California town and more than $180,000 for a patient in technology-rich Silicon Valley. The patients, both female, had essentially the same number of preoperative studies, type of surgical procedure, and length of hospital stay. The only significant difference was that the Silicon Valley resident had been a cancer patient, but there was no indication of any cancer-related treatment during her hospital stay.
In the study, the cost disparity seemed to be related to two things: the health of the patient and the geographic location of the hospital where the procedure was performed.
Data for the overall study was gathered from California hospitals for 19,368 appendectomy patients in 2009. Comparisons were made only for patients between the ages of 18 and 59 whose procedure was a standard appendectomy requiring a hospitalization of less than four days. The billing data included the hospital room, operating room, the surgical procedure, surgical supplies, other tests and medications.
Examiners looked at the gross billing to the patients, prior to any health insurance company write-offs or payments, and did not have access to what the hospital actually was paid. Since the data did not reveal whether any patient was covered by health insurance, the total gross billing was the amount owed to the medical care facility if they were uninsured. Charges were determined to be the highest at profit-oriented hospital facilities and nonprofit hospitals, with the lowest charges seen at county facilities.
The results were that some disparities could be rationalized, but clearly there was no rationale for one third of the cost differences. According to the International Federation of Health Plans, the average price for an appendectomy should be around $28,000.
Dr. Renee Hsia with the University of California, San Francisco, said “there’s no method to the madness” and “there’s no system at all to determine what is a rational price for this condition or this procedure,” suggesting that the system itself was broken. Her idea is that people are not able to hospital shop when the need arises, since medical care facilities don’t advertise their services and the related costs. A physician with Dartmouth College’s Center for Health Policy Research, Dr. David Goodman, deemed the findings of the study to be “very concerning.”
Also weighing in one the findings was Caroline Steinberg of the American Hospital Association, who said that two people having the same procedure in the same hospital at the same time would receive the same bill, since the real variation is where the operation is performed and the hospital’s costs in providing the services. Dr. Howard Brody from the University of Texas Medical Branch in Galveston, Texas, a long-time opponent of spiraling medical costs, said that unfortunately “the laws of supply and demand do not work well on healthcare.”
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