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February 13, 2013

JAMA: Hospitals still struggle to answer price questions

Daily Briefing

Only 16% of surveyed U.S. hospitals are able to provide an estimate for the total cost of a hip replacement procedure, according to a study published this week in JAMA Internal Medicine.

For the study, researchers from Washington University in St. Louis and the University of Iowa's Carver College of Medicine contacted 122 hospitals—two hospitals in all 50 states and the District of Columbia, and 20 of the highest-ranked orthopedic hospitals according to U.S. News and World Report.

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The researchers asked each hospital to estimate the cost of a hip replacement for a 62-year-old, uninsured individual who could afford the procedure out-of-pocket. They found that:

  • Nine of the 20 orthopedic hospitals and 10% of the other hospitals could provide a full cost estimate for hospital and physician fees after a minimum of five phone calls;
  • 12 of the orthopedic hospitals could provide a complete cost estimate after the researchers contacted the hospital and affiliated physicians separately; and
  • 54 of the remaining hospitals could provide a complete cost estimate after the hospitals and affiliated physicians were contacted separately.

Further, the cost estimates varied widely, ranging from $11,100 to more than $125,000.

However, according to the New York Times' "Well" blog, the study has many caveats. Most patients or insurers rarely pay the full price for a procedure, because insurers typically bargain with hospitals and physicians for lower rates. In addition, the researchers found that some hospitals reduced their rates after finding out that the patient was uninsured. Some estimates also failed to include outpatient fees and other additional costs.

The study's authors and some health policy experts say the study illustrates the problem of inadequate transparency in medical pricing and the challenges patients face in trying to find the most cost-efficient care.

Peter Cram—a co-author of the study and an associate professor of internal medicine at the University of Iowa—said, "Transparency is all the rage these days in government and business, but there has been little push for pricing transparency in health care, and there's virtually no information," adding, "I can get the price for a car, for a can of oil, for a gallon of milk. But health care? That's not so easy."

In an accompanying editorial, Ezekiel Emanuel and Andrew Steinmetz of the University of Pennsylvania said there is "no justification" for the price variance in the hip replacement procedure or hospitals' inability to provide cost estimates.

Study co-author Jaime Rosenthal—a student at Washington University in St. Louis—noted that consumers must "take responsibility and put pressure on hospitals to make this information available" (Terhune, "Money & Co.," Los Angeles Times, 2/11; Rosenthal, "Well," New York Times, 2/11; Pittman, Reuters, 2/11; Rosenthal, JAMA Internal Medicine, 2/11 [subscription required]).

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