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Survey: Costs of Prostate Cancer Surgery Vary Widely Among U.S. Hospitals

Authors find 13-fold price difference

A new study from the University of Iowa has compared the cost of prostate cancer surgery at 100 hospitals throughout the U.S. The researchers found that quotes for the procedure varied from $10,100 to $135,000, a 13-fold range. The average price was nearly $35,000 — more than double the Medicare reimbursement.

Only 10 of the hospitals that provided cost information divulged anesthesia and surgeon costs — key criteria to consider when pricing a surgical procedure. Moreover, only three hospitals provided hard copies of the charges, further complicating a patient’s ability to compare costs, the study found.

“Such variability in pricing can produce significant confusion for consumers who are accustomed to the rules of free-market economics, which equate higher fees with higher quality,” the researchers wrote in Urology. “Unfortunately, in health care, this has not been found to be true.”

Prostate disease is a major health concern in the U.S. It accounts for 28% of all new cancer diagnoses in men and for nearly $12 billion in treatment costs, according to the American Cancer Society. Approximately 138,000 prostate cancer surgeries are performed yearly, according to government figures; and yet, despite the commonness of the disease and the frequency of surgeries, a reliable, accurate quote is hard to come by, the authors say.

Part of that is due to the system itself. What hospitals charge for a procedure doesn’t reflect the actual costs, says corresponding author Dr. Bradley Erickson. Think of the hospital’s quote as the opening salvo in a negotiation — a give-and-take primarily with the health insurance provider over how much the hospital will be reimbursed. In that scenario, the higher the quote, the more room there is to negotiate, and thus arguably the more money the hospital could make.

“These [hospital] charges don’t mean anything,” Erickson says. “There’s no weight behind them.”

That means the consumer is working with inflated figures, at best, which puts them “at a significant disadvantage,” Erickson says. Further, the researchers learned that little information is available about how well hospitals perform prostate cancer surgeries, as they usually report outcome data only to government agencies.

That lack of transparency is “a huge problem,” Erickson says. “It doesn’t really incentivize any place to improve outcomes, because no one is holding us individually accountable for it.”

That could be worrisome to health-care consumers who may face higher deductibles under the Patient Protection and Affordable Care Act, Erickson notes. “We’re not ready for it [pricing transparency], because most hospitals can’t tell you how much they charge,” he says. “And the ones that do aren’t based on reality.”

Among the study’s other findings:

  • 70 of the 100 hospitals surveyed provided some pricing.
  • Of that number, nearly half (33) said they would discount the procedure for pre-pay or promptly paying patients.
  • Academic medical centers charged 52% more, on average, than did nonacademic centers.
  • Hospitals in the Northeast U.S. charged the most (at an average of $40,802), whereas hospitals in the South charged the least (at an average of $30,305).
  • Hospitals in the Midwest were the most likely to provide estimates and to offer discounts.

The new survey follows a study published last year in JAMA Internal Medicine, which found that hip-replacement costs at hospitals nationwide ranged more than 10-fold, from $11,100 to $125,798. The researchers found that this was largely due to the lack of transparency and knowledge about how hospitals set their prices.

The new study also corroborates findings from the Centers for Medicare and Medicaid Services, which reported wide price differences for a variety of medical procedures across the U.S.

Source: University of Iowa; June 9, 2014.

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