Hospitals will quote prices for parking, not procedures

NEW YORK (Reuters Health) - People usually don’t know what their medical procedures cost until after they leave the hospital, and a new study suggests they would have a hard time finding out in advance

Inspired by an earlier study looking at hip replacement surgery costs, researchers tried to see if consumers could get price quotes for a much simpler diagnostic test from Philadelphia area hospitals.

They found that parking prices were readily available by calling the hospital and asking, but only three out of 20 hospitals could provide the cost of an electrocardiogram test.

“We were motivated by the Rosenthal study on hip pricing. It was a great study and a real eye opener,” said Dr. Joseph Bernstein, a professor of orthopedic surgery at the University of Pennsylvania in Philadelphia.

“Still, if you wanted to disbelieve its conclusions, you had an out,” Bernstein, who led the new study, told Reuters Health. Because hip replacement is complex and many factors, such as the patient’s health or the type of replacement hip used, can vary, it might be unrealistic to expect a flat price.

“Just like you can’t call a contractor on the phone and ask ‘how much does it cost to remodel my kitchen?’ Maybe it would be unreasonable to expect a price quote on the phone for ‘remodeling’ your hip as well,” Bernstein wrote in an email.

So Bernstein and his coauthor decided to see if getting a price for a more standardized and straightforward heart test might be any easier.

“We tested phone pricing for a more commodity-like procedure...and found that the principle of Rosenthal applied here too,” Bernstein said.

The earlier study led by Jaime Rosenthal was published online by JAMA Internal Medicine last February (see Reuters Health story of February 11, 2013, here:

Seeking a price for hip replacement surgery, Rosenthal had called 120 hospitals and got quotes ranging from $11,000 to more than $125,000, but more than half of the hospitals could not give Rosenthal a cost for the surgery at all.

To test whether the problem was simply that hospitals are not able to quote prices over the phone, Bernstein’s team also called all 20 Philadelphia hospitals and asked the price for another commodity: parking.

Only three hospitals were willing to quote a price for an electrocardiogram. The three prices varied greatly: $137, $600 and $1,200. Nineteen hospitals provided parking price information, ten of which offered discounted parking for visitors.

The new study is described in a research letter in JAMA Internal Medicine.

Bernstein believes that hospitals have the ability to provide price information and since many were willing to offer discounted parking rates, he thinks that hospitals could respond to patients’ concerns about costs as well.

“We don’t think providers are going to discuss prices - let alone compete on that basis - unless and until consumers start to demand that information,” Bernstein said. “Yet without that exchange, there won’t be (enough) pressure to keep prices down. As such, consumers of health care should get in the habit of asking, ‘if you don’t mind, please tell me what that will cost.’”

Although the prices quoted for the procedure varied greatly, since it’s still such a small number, Bernstein said it would not be wise to generalize that price to the other hospitals that didn’t respond.

“The real message is that we could not get any information from the other seventeen,” he said.

Price transparency is an important piece of improving the health care system, Dr. Martin Makary told Reuters Health. But, he said, we should not be fooled into thinking it’s a comprehensive metric of value because one thing that’s been noticeably absent in the price transparency discussion is quality transparency.

Makary is surgical director at the Johns Hopkins Pancreas Multidisciplinary Cancer Clinic and associate professor of surgery at John Hopkins University School of Medicine in Baltimore. He is also the author of “Unaccountable: What Hospitals Won’t Tell You and How Transparency Can Revolutionize Health Care” and was not involved in the study.

Makary said there needs to be price transparency because ultimately the marketplace needs to compete over value and not prices - consumers have to measure quality and not just quantity.

Quality transparency, he explained, includes things like appropriateness criteria and complication rates.

Makary envisions that price transparency coupled with quality transparency will be the dominant measure of the future health care marketplace and that it will have a serious impact on the way that business is done.

Source: JAMA Internal Medicine, online December 2, 2013.