A Healthy Comparison

If you’re planning to have a baby soon or to have an appendix removed, good luck if you’re hoping to shop hospitals for price comparisons.

Many hospitals discourage price shopping, and all the Northwest Arkansas hospitals contacted for this story — Washington Regional Medical System, Northwest Medical Center, Bates Medical Center, St. Mary’s Hospital and Siloam Springs Medical Center — declined to release average prices for certain procedures, including childbirth, appendectomies and prostate surgery.

Washington Regional officials explain that price comparisons are difficult and may be misleading since every hospital uses its own unique method to determine prices. Complicating the issue is the fact that every case is as unique as the individual involved.

David Rew, senior vice president at Washington Regional Medical Center, says it’s quality of care, not price, that concerns most patients.

And Russell W. Nugent Jr., Regional’s chief financial officer, says prices have been negotiated in advance with many payers, including insurers and, in some cases, employers. It’s the uninsured patient, who must pay the bill himself, who’s most concerned about the expense, and those patients lack the clout of large companies to negotiate discounts.

The one local facility willing to publicize its prices for certain procedures is Arkansas Surgery Center, an outpatient clinic in Fayetteville owned by Universal Health Services, a publicly held company based in Pennsylvania.

But procedures performed at the center are primarily elective. The clinic doesn’t deliver babies or treat emergency cases. And, not surprisingly, the center’s prices compare favorably with those of other local hospitals.

The figures cited by Arkansas Surgery Center were actually compiled by Medical Benchmarks, a Tuscaloosa, Ala., company that uses information from the Health Care Finance Administration, the federal agency that oversees the Medicare program. The data comes from claim forms submitted by the providers — in this case, the hospitals — for services they’ve rendered to Medicare beneficiaries.

One of the procedures is a gastrointestinal endoscopy biopsy, in which the physician looks at the stomach and esophagus using a small scope. According to Medical Benchmark’s figures, Arkansas Surgery’s charges averaged $515 for the procedure while Washington Regional’s cases averaged $1,290 and Springdale’s Northwest Medical Center weighed in at $748.

For a laparasfchopic cholecystectomy – gallbladder removal — Medical Benchmarks priced the procedure at $3,449 at Arkansas Surgery Center, $3,423 for Washington Regional and $3,299 for Northwest.

Another increasingly common procedure is for carpal tunnel relief. Medical Benchmarks reported average prices as $849 for Arkansas Surgery Center, $1,092 for Washington Regional and $1,075 for Northwest.

Russ Greene, the surgery center’s executive director, contends that patients have a right to know the cost in advance because only then can they make informed decisions about which facility to choose — and there is, in many cases, a choice, even if the patient has medical insurance.

Greene says it’s not always less expensive to use the providers in an insurer’s network, even if the patient has to pay a much higher percentage of the cost by going outside the network.

As an example, he cites a colonoscopy, a procedure in which the physician examines the colon using a small camera attached to a scope. For that procedure, Benchmark found Arkansas Surgery Center’s average cost was $531, compared to $1,069 for Washington Regional and $631 for Northwest.

A patient whose insurer requires a 20 percent co-payment for using a network provider would have to pay $213.80 at Washington Regional, if that hospital were in the network, Greene says.

But even if the insurer required a 40 percent co-payment for using an out-of-network provider, Arkansas Surgery Center’s charge would be virtually the same — $212.40.

Further, Greene continues, the center uses “global billing,” meaning all expenses, except the physicians’ fees, are included and the price can be quoted prior to the procedure. Most hospitals, he says, use some type of line-item billing, in which each item used in the procedure is assigned a cost that goes into the billing.

Medicare case averages

Washington Regional officials compare their expenses to peer institutions through a data collection network in which the hospitals voluntarily contribute their information. The hospital compared favorably to several others in a comparison of actual average charges of Medicare cases from 1995.

According to the data, the average cost per Medicare patient was $9,071 at Washington Regional, $10,369 at Springdale Memorial Hospital (now Northwest Medical Center) and $6,886 at St. Mary’s Hospital in Rogers.

Little Rock hospitals were considerably higher: St. Vincent’s was $15,270, UAMS Medical Center was $20,699 while Columbia Doctors Hospital was $18,006.

However, officials caution that the figures don’t account for the severity of cases. A hospital that treats many older and sicker patients, such as UAMS, will likely weigh in with higher average costs.

Arkansas Medpar figures are also available for certain procedures, but again, hospital officials caution against using the numbers as an accurate reflection of what prices would be for an individual.

For example, the average cost for a Medicare in-patient with simple pneumonia at Washington Regional in 1995 was $4,533. For other hospitals, the average was $6,453 at Northwest Medical Center, $4,371 at St. Mary’s, $12,766 at Little Rock’s Doctors’ Hospital and $8,596 at St. Vincent’s.

Heart failure averages were $5,453 at Washington Regional, $6,848 at Northwest Medical, $5,357 at St. Mary’s, $10,204 at Doctors and $8,008 at St. Vincent’s.

Hernia cases averaged $5,522 at Washington Regional, $9,145 at Northwest, $13,261 at Doctors and $13,987 at St. Vincent’s. No figures were available for St. Mary’s.

For cardiac arrhythmia, the averages were $3,826 at Washington Regional, $4,013 at Northwest, $3,786 at St. Mary’s, $5,927 at Doctors and $4,850 at St. Vincent’s.

Columbia Doctors Hospital, which had the highest charges in most cases, is the only for-profit facility among those listed here.

Business taps interest in cost comparisons

Russell Peake is owner of Medical Benchmarks, the Alabama company that compiles, for a fee, hospital costs from across the country.

Peake says his company has grown each year since its inception in 1992. Its reports are customized for each client, surveying an array of procedures performed by facilities defined by the client. The reports, Peake says, are usually used for competitive analyses.

Price shopping, he says, is very difficult to do. “The information is generally not available that would allow the consumer, the patient, to know what is the cost of a … [tonsillectomy or other procedure]. That information generally is not compiled except after services are rendered.”

Peake also noted that each hospital establishes its own system for setting rates, but most use component prices — that is, prices for use of the operating room, the recovery room, cost for nursing services. Those components are then added together in billing the patient.