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Cost of health care varies widely at North Bay hospitals

Published: Wednesday, May 8, 2013 at 1:12 p.m.
Last Modified: Thursday, May 9, 2013 at 8:22 a.m.

The prices that North Bay hospitals charge for the same procedure vary widely from one facility to another, according to data released Wednesday by the federal government.

The public release of the data will help make the U.S. health care system more affordable and accountable, Health and Human Services Secretary Kathleen Sebelius said.

“Currently, consumers don't know what a hospital is charging them or their insurance company for a given procedure, like a knee replacement, or how much of a price difference there is at different hospitals, even within the same city,” Sebelius said in a statement. “This data ... will help fill that gap.”

For example, Kaiser Permanente Medical Center in Santa Rosa charged $44,278 for a procedure to replace a major joint or reattach a lower extremity, while nearby Memorial Hospital charged an average of $136,762, according to Medicare billing data released by the U.S. Department of Health and Human Services.

In reality, Medicare and other insurers often pay hospitals far less than the “sticker price” charged by the hospitals, experts said. In the example above, Medicare paid an average of only $16,288 to Kaiser and $18,387 to Memorial Hospital.

“There are large parts of our health care system that just don't make a lot of sense,” said Anthony Wright, executive director of Health Access California, a consumer advocacy coalition. “The health care pricing and prices make no sense to both lay people and experts, and there needs to be a reform of how providers are paid.”

The vast disparities in how much hospitals charge reflect a variety of factors, including the populations each serve and the depth of specialties provided by the institution, health officials said. For example, Memorial Hospital is the region's sole level II trauma center, which raises the nonprofit hospital's costs.

“Memorial plays a singular role on the North Coast in terms of the complexity of care we provide,” hospital spokeswoman Katy Hillenmeyer said. “The fact that other hospitals refer us their most complex, sick patients, that factors into cost.”

Nobody actually pays the amount that hospitals charge, said Don Forst, director of patient financial services for Memorial. That billed amount serves as a starting point for negotiating with government providers like Medicare, private insurance companies and individuals. Uninsured patients get automatic discounts, and low-income patients also are cut a break.

“In many cases, we're lucky if we get 20 percent,” Forst said. “The big problem today is that charges really are irrelevant ... it basically defaults to the highest rate, so the patients see the bill and they panic.”

Kaiser has a different model because it insures its own patients and services are generally provided under one roof, creating some efficiencies, Wright said.

“The Kaiser Permanente data reported today do not reflect the common experience of our members, who generally never receive hospital bills,” Kaiser spokesman David Ebright said in an email.

Hospitals nationwide are included in the comparisons, which focused on the 100 most common Medicare inpatient stays.

In one example, treatment for poisoning and toxic effects of drugs triggered an average bill to Medicare for $15,092 from Ukiah Valley Medical Center and $40,828 from Marin General Hospital, the report said. Medicare ended up paying an average of $4,746 to Ukiah Valley and $10,776 to Marin General, according to the data.

When comparing what Medicare actually paid the hospitals, the rates fall within a more comparable range, said Jamie Maites, spokeswoman for Marin General.

“There may be a few places where Marin is higher,” Maites said. “We're the only designated trauma center for Marin, so for those kinds of procedures, we're going to be higher.”

When both hospitals were treating patients for simple pneumonia without major complications, Marin General billed $53,429 while Ukiah Valley billed $19,256. But there was less difference between the average amounts each were paid by Medicare: Marin General got $7,379 while Ukiah Valley got $5,397.

“Part of it is the relative negotiating power,” Wright said. “We know that in Northern California there are a couple hospital chains that have a dominant position, like Sutter, that can demand a higher price.”

Demographics of the region also impact the rates hospitals charge, said Nick Bejarano, spokesman for Ukiah Valley Medical Center.

“Every year our finance committee looks at the data to make sure we're competitive, but also that we're sustainable, and can cover our costs and overhead,” Bejarano said.

Memorial Hospital is working hard to lower costs by reducing the length of stays in the hospital and emphasizing preventive measures to keep patients out of the hospital, Hillenmeyer said.

The data release was the first of several planned by the federal government, said Patti Unruh, spokeswoman for Centers for Medicare and Medicaid Services.

“This is a first and major step in shining light on health care prices, which up until now have been a mystery,” Unruh said. “We want to get to a place where consumers can do comparison price shopping.”

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