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Study: The Price Of Surgery Does Not Reflect The Actual Cost

Fri, 06/13/2014 - 10:28am
Mikhaila Friske, Editorial Intern, Surgical Products

Prostate cancer accounts for 28 percent of new cancer diagnoses in males. This leads to about 138,000 surgeries performed each year. Still, there is not a wealth of information available to patients about how well a hospital performs prostate cancer surgeries or what the actual cost of the procedure is. Most of the information is only provided to government agencies, and is not public access.

With a world of information at our fingertips, it is hard to believe there is a lack of information when it comes to quality and pricing of prostate cancer surgery. A new study from the University of Iowa (UI) shed some light on the situation by comparing prices throughout the United States at 100 hospitals.

The study found that prices for prostate cancer had over a 13-fold range, with pricing from $10,100 to $135,000. The researchers, as well, found that factors other than population or a hospitals ranking impacted price variability. Academic medical centers average charges that are 52 percent more than nonacademic centers, and, on average, the Northeast charged the most while the South the least. However, according to UI researchers, the price does not always equal the quality of the procedure.

For such high prices, the quality of service should not only to be called into question, but, more importantly, the costs to the hospital for a procedure. Costs are not reflected in the high prices of surgery. A fact hospitals know, and do not actively disclose. Out of the 100 hospitals surveyed, 70 provided some sort of pricing on prostate cancer surgery. From those hospitals only ten disclosed information about anesthesia and surgeon costs. Only three provided a hard copy of charges.

The UI’s findings also revealed that 33 of the hospitals that provided price quotes were likely to give prepay or promptly paying patients up to an 80 percent discount. In the Midwest, the researchers found hospitals to be more likely to provide estimates and discounts to patients than any other region in the U.S.

It is not just prostate cancer surgery with elusive pricing. Another UI study found hip replacement prices to range from $11,100 to $125,798. Further supporting high price variability are findings from the Centers for Medicare and Medicaid Services that reported wide differences in the prices of a variety of procedures.

The reality of it all is prices do not reflect actual cost. It is highly implausible that the same procedure, even when taking in factors of more experienced staff, would be 13, or even 10, times more expansive from one hospital to another.

There is a lack in pricing transparency. Patients are not given detailed information about costs of a procedure, which means hospitals are not being held responsible for the outcomes of their surgeries because people do not know what their money actually gets them. This gives hospitals no incentive to adjust prices or improve outcomes.

Yet, hospitals are not yet ready for such pricing transparency. Many hospitals cannot tell someone how much they charge, and if a hospital can, the price is not based on the costs.

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