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When It Comes to That Hip Replacement Surgery, Can We All Really Be “Savvy Shoppers”?

When It Comes to That Hip Replacement Surgery, Can We All Really Be “Savvy Shoppers”?

Jaime Rosenthal, a senior at Washington University in St. Louis, recently got a lot of attention for her summer research project on the availability of health care cost information. She called 122 hospitals around the country to ask the cost of hip replacement surgery for her (fictitious) uninsured grandmother who had the means to pay for the surgery.  The report, published in the online version of JAMA Internal Medicine, sparked a media frenzy, including press coverage at NBC News, blogging by the New York Times, Reuters, and numerous commentaries in health care industry journals.[1]

The bottom line was that the prices she was able to obtain varied enormously, for no discernible reason, from about $11,000 to over $125,000. It was very difficult for Ms. Rosenthal to get any kind of price estimate from a significant percentage of the providers she called.  Co-authors of the report from the University of Iowa recommended that patients should put pressure on providers to be more transparent about costs and that "patients seeking elective THA (total hip replacement) may find considerable price savings through comparison shopping."

To test the researchers' recommendations, I did some savvy shopping of my own.  In a quick check on the Maine Health Data Organization's (MHDO) HealthCost website, I discovered that Maine reflects the nation pretty closely:  payments made for hip replacements varied from around $10,000 all the way up to nearly $100,000, with most in the $15,000 - $25,000 range.  (For more detail on the cost data I researched on MHDO's site, see the end of this post.)

Although the pricing information available from the MHDO could be more up to date, I was able to get a better understanding of the range of costs for the surgery.  So far, so good in applying the recommended "comparison shopping" approach. But here's where the approach breaks down.

While comparison shopping may work for someone like me  - an insured, health care data "super user" with lots of flexibility about where to get care - that approach isn't available to or appropriate for many patients.  When seeking health care services, even elective services, many Mainers' ability to be savvy shoppers may be constrained by factors outside of their control.  Life circumstances, the ability to travel, overall physical and mental health and functioning, location of rehab care, and other factors all may severely limit the ability to "shop around" for services as one might for a new car or microwave oven.

So, while transparency in the cost of health care services is essential to payment and health reform efforts, let's not over-emphasize the comparison shopping model.  Instead, it's time for health care to begin untangling "prices," "charges," and "payments" in such a way that costs are clear to all patients, regardless of their circumstances.  Furthermore, pricing information should not only be readily available, but the quoted prices should be reasonable and comparable as well. 

[1] Some of the coverage: NBC News: How much will surgery cost? Good luck finding out, 2/11/13.

New York Times: Price for a New Hip? Many Hospitals Are Stumped, 2/11/13.

Note: Here's more on my exploration of the data on the cost of a total hip replacement: MHDO lists charges for this surgery by insurer, as well as for uninsured people who would be billed for the procedure out-of-pocket.  I checked the three insurance companies from which I've had coverage in the past several years and found that their average charges were quite similar- around $20,000.  If I was uninsured, charges would more likely be in the $25,000-35,000 range, depending upon provider.  It is important to note that individuals with incomes under 150% of poverty will receive care free in hospitals, and many hospitals provide sliding fees or will negotiate payment plans for people without insurance.

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