The same surgery, $220,000 apart: Why providers and employers need to rethink value in the case of price differences

Research released Monday by market research firm Trilliant Health reveals the price difference for the same service by providers. The report examined data from 2,659 hospitals and 3,491 outpatient surgical centers and found that patients with commercial insurance paid a huge amount for the same service – these fees were absorbed primarily by employers.

For example, this suggests that the median coronary bypass rate without cardiac catheterization or major complications is $68,194, but the negotiated interest rate ranges from $27,683 to $247,902, with a difference of more than $220,000.

Often, there are huge price differences even in the same procedure in the same hospital. For example, the Tufts Medical Center in Boston does not have coronary artery bypass surgery with cardiac catheterization. The interest rate for AETNA negotiated is $95,989, while UnitedHealthCare is $144,204.

Allison Oakes, chief research officer at Trilliant Health, called it “surprising and problematic” that the price difference between the exact same tool is nearly $50,000.

“The amount of costs for the program depends on who pays the fees. There is no way other industries work. Healthcare has long been an exception to the rule and needs to be over,” she said.

The report also noted that among the 10 hospital samples that often appear in the “Best Hospitals” ranking, researchers found no clear link between the cost of care and the quality of that care.

Oaks noted that this is another disappointing difference in healthcare compared to other departments. In most industries, things are expected to operate in the “you get what you pay for” model, which means more spending equals a higher quality product or service.

“Since prices have been around for a long time, providers and insurers don’t have to compete on price. Therefore, price is not a reliable signal of quality. Every healthcare stakeholder needs to reevaluate their pricing to ensure they provide value to their patients. If you provide quality at an average price for higher than average prices.

She encourages providers to “look at the mirror carefully” and evaluate how much they provide high-value services to their patients. In her opinion, the only way a provider can continue to win a patient with commercial insurance is to demonstrate the clear value of the cost.

Oakes notes that providers can do this in one of three ways: at market prices that are better than average quality, better than average quality below market prices, or at average quality below market prices.

She added that as more and more price transparency data becomes available, the public will gain potential to understand the exact rates for each provider across the country.

However, experts agree that in most cases, price transparency regulations (albeit with good intentions) don’t really help the average American store in the United States to take care of. Most of the new rules around price transparency have so far made patients responsible for seeking pricing information and taking the time to analyze confusing spreadsheets, Oaks said.

“The data shows that interest rates for business negotiations are fundamentally flawed. In fact, we should not expect a small number of patients to get rid of this problem. This scale of problems requires larger, top-down solutions,” she explained.

In some ways, the current scope of the current issue is not surprising, as Oakes sees, “a market with proprietary pricing is doomed to fail.” But now that these cost data have become unshakable, providers and payers need to start competing at prices.

Oakes noted that the availability of pricing data also implies employers’ fiduciary obligations to purchase health benefits in the best interests of their employees.

“Knowing that there is such a difference and wasteful spending, employers need to start asking tough questions and ask the benefited brokers and health plans to provide them with the data they need to choose a high-value plan for their employees,” she declared.

She noted that employers are very important stakeholders in the national health care system, responsible for about 30% of the country’s health expenditure.

Oakes hopes the data is a call from employers, saying they need to be aware of the leverage they have and start asking for answers.

Photo: Adrienne Bresnahan, Getty Images