Massive Hospital Price Variations: Only in America (*Except Maryland)By: Jon Walker
Thursday May 26, 2011 1:17 pm
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Massachusetts is still struggling with controlling health care costs since it decided to embrace health care reform by just expanding our broken private insurance system to cover more people. A problem in Massachusetts, which is common around the country, is that there are huge variances in what is paid for the same procedure. From the Boston Globe:
Cambridge Health Alliance was paid less than $5,000 each for 55 caesarean sections performed in 2009, while Massachusetts General Hospital was paid more than $10,000 each for 483 caesarean deliveries that year, state officials found.
They said it was unclear why insurers paid some hospitals dramatically more, since officials found no obvious differences in quality of care, and their analysis allowed for instances in which hospitals treat sicker patients.
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If the range of payments is narrowed to bring the lowest-paid providers up 20 percent and the highest-paid providers down 20 percent, insurers would actually save $267 million, she said.
The huge prices charged by some hospitals shouldn’t be surprising if you understand the market issues at play. It takes a large population to support a hospital and people can only travel so far to get to one. The result is some hospitals are functionally de facto monopolies over an essential service. They can use this huge market power to demand big rates. This same inherent monopoly issue is why we regulate utilities and the rest of the world regulates prices in their health care systems.
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More:
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