US Hospitals Have Dramatic Differences in Pricing for Same Procedures

May 29,2013

Americans like to consider their health care the best of the best. But in the most recent CIA (Central Intelligence Agency) life expectancy estimates, the U.S. ranks 51st in the world. And the cost? Americans pay at least twice as much for their health care than most developed nations, including England and France. These costs hit uninsured Americans the hardest. And the charges vary from hospital to hospital.

Rickey Dana is one of millions of Americans living with a long-term illness.

"I would wake up in the middle of the night, vomiting whatever I had eaten, if there was anything left in there. It was disastrous [in a whispered sigh]," said Dana.

The diagnosis: chronic Lyme disease, a tick-borne bacterial infection. Her pre-existing condition of depression had already caused insurance companies to either deny her coverage or offer unaffordable policies. And the bills kept adding up.

"March. March. March. March. These were all due within a week of each other," she said.

Her doctor put her on four different drugs and told her she needed rest. But all she could think about was how to get by after losing her job and racking up tens of thousands of dollars in medical bills.

"I have to pay rent, and you're charging me $400 for a 30-minute consult. But you don't want me to have stress in my life," she said.

New data released from the government this month reveal the costs of care vary wildly from hospital to hospital. For example, the same procedure can cost $12,000 or $37,000 in Arkansas; $35,000 or about $100,000 in different California hospitals; and $14,000 or $32,000 in Virginia.

Dr. Gerard Anderson heads the Johns Hopkins Center for Hospital Finance and Management. He says hospitals have marked up the charges so much over the past 30 years that they no longer have any ties to actual costs.

"It's not the input prices. It's not the cost of nurses and labor and those kinds of things. It is just what they choose to charge," said Anderson.

Michelle Katz is a nurse and health care consultant. She says those pricing practices are unfair.

"There needs to be some sort of regulation, some sort of transparency, where if I go to the hospital I know I'm not going to go into debt because I went into the hospital," said Katz.

Millions of Americans like Dana are hoping when a key part of the Obama Administration's health care reform initiative goes into effect next year, it will fix these sky-rocketing costs. The Affordable Care Act will give tens of millions of Americans new access to health care services. But Dr. Anderson says the wild and inconsistent charges won't be going down.

"It's not bringing them back to a normal, reasonable amount. It's just constraining the rate of increase," he said.

Dana applied for financial aid and reduced her bills from $40,000 to $10,000.

"I didn't even have to fight them or anything. They were great," she said.

But even then, the remaining cost has placed such a burden on her that she's had no choice but to leave her home for a cheaper place to live.