Surgical Costs Are a Known Unknown with Wide Variation Across the State

Tuesday, January 27, 2015

Two years ago, the Washington Post wrote about a college student who called 102 hospitals for a research paper on the cost of a hip replacement. Only 10% produced the information and the prices ranged from $11,000 to $125,000.

“I learned a lot about the health care system and the need for pricing transparency, which I never really considered,” Jaime Rosenthal said at the time, after scrounging for data not publicly available.

Transparency is still not widely considered and the price variation apparently hasn’t changed much. The BlueCross BlueShield Association published a study (pdf) last week of hip and knee replacements in 64 health care markets across the country and, because they’re a giant insurance concern, they could gather information more easily than a college student. 

But they found the same gaping price differential, and nowhere was it more pronounced than California. Only the Boston area had a wider disparity in pricing for hip replacement surgery than the L.A.–Long Beach area. The average quoted price in both markets was around $26,500, but Boston ranged between $17,910 and $73,987 while L.A. was $17,260 to $46,447. These quotes don’t include insurance or price negotiations, so they aren’t actual costs.

L.A.’s differential was 169%, followed in California by San Diego (100%), Orange County (46%), Riverside-San Bernardino (23%) and Fresno (8%). Although the study included hospitals that treat 100 million people, it did not include the Bay Area.

The average cost nationally for hip surgery was $30,124. Birmingham, Alabama, offered the cheapest price, $11,327, about 15% of Boston’s quote. All the California markets, except San Diego ($34,236), were below the national average. 

California fared much better in cost variation for knee replacement surgery. The Dallas differential was the nation’s worst, at 267%. Orange County was the worst in California (100%), followed by L.A.-Long Beach (63%), Riverside-San Bernardino (24%), San Diego (15%) and Fresno (1%).

The differentials are high and transparency is still low, and that’s before trying to figure in the know unknowns, like insurance. Factor in confusion about which doctors and hospitals are in Covered California networks, and disagreements between insurance carriers and providers over coverage and payment, and it’s clear that there is some way to go before patients will have easy access to true cost information on hip and knee surgery.

But it could be worse. They could need an appendectomy. Researchers at the University of California, San Francisco in 2012 found a price differential in the state of 11,866%, ranging from $1,529 to $182,955.

The study concluded: “Much work remains to be done to allow consumers to fulfill the role of a true consumer in the health care marketplace.”

–Ken Broder   


To Learn More:

Knee, Hip Surgery Costs Vary by $40,000 from Anchorage to Manhattan (by Bruce Japsen, Forbes)

Price of Hip Surgery Varies from $17,000 to $46,000 in L.A. (by Chad Terhune, Los Angeles Times)

Study Finds Big Disparities in Local Prices for Hip, Knee Surgeries (by David Morgan, Insurance Journal)

How Much Does Hip Surgery Cost? Somewhere Between $10,000 and $125,000 (by Sarah Kliff, Washington Post)

A Study of Cost Variations for Knee and Hip Replacement Surgeries in the U.S. (BlueCross BlueShield) (pdf)

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