September 30, 2010

Shop Around For Health Care

The blogger Frugal confessions shopped around to get price quotes for a hernia operation at local hospitals.   The costs cited by different hospitals varied significantly.   At the low end, one hospital would charge $3900 to $4900 and the most expensive wanted $16,100.   The most expensive is a shocking 312% more than the least expensive.    Thats a huge difference.  

When Shopping Around Makes sense

You can't shop around if there is an emergency.   It really only makes sense to shop around for costs if your procedure is not urgent and you have the ability to choose the hospital you go to.    Some health plans will tie you to specific hospitals that are "in network" and you won't have the freedom to go anywhere.   In other cases the procedure you require may only be performed at a certain hospitals which my limit your choices.

Comparing costs at My local Hospitals

My state happens to have an online database that cites the median and mean cost for various common medical procedures at each of the hospitals.   That makes it particularly easy for me to shop around.   I looked up a few procedures at the hospitals nearest to me to compare the costs:

1.) I checked the prices for a common procedure at the hospitals around here and the median prices were : $5,309, $6,300, $6,500, $8,722 and $9,456.     The most expensive is $4,147 or 78% more than the least expensive.  
2. ) I searched for appendix removal and the costs for that were : $9,747,  $13,964, $7,244, $12,200 & $9,689  The cheapest was $7,244 and the most expensive was 68% more at $12,200.    Thats a difference of up to $4,956.
3. ) Lets say you need a hip joint replacement.   That would cost you : $20,863, $26,210, $18,597, $22,006 & $21,067.     The cheapest at $18,597 and the most charged $26,210.     That is a 40% premium for the most expensive over the least.    You could pay up to $7,613 more at the most expensive.

So that is 3 semi randomly selected, fairly common procedures that had price differences of 78%, 68% and 40% between the cheapest and most expensive hospitals in the area.

Why Should You Care if You Have Insurance?

You may have a traditional co-pay insurance plan where you are not responsible for paying anything past a $25 co-pay.   But you may also have to pay a deductible and you might also have co-insurance.    Only the very best health insurance nowadays comes with no out of pocket costs.   So most of us are going to have to pay at least some of the bill for a hospital procedure.   If you have co-insurance then you'll be paying 10-20% or more of the cost usually up to a maximum level.    Whether you have a deductible or co-insurance its going to help you save cost if you shop around.     Even if you have no real out of pocket costs yourself there are indirect costs for your insurance and its best for all of us to help keep the costs down.   Just because someone else is paying the bill it really doesn't make much sense to write a blank check to the hospitals.

Consider Hospital Quality

Of course this doesn't say anything about the quality of the hospital.   I wouldn't just go  the cheapest hospital if it meant receiving very low quality care.   It is also important to compare the quality of the hospitals.

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