August 30, 2018
More than nine out of 10 hospitals charge at least $30,000 for joint replacement surgery — one of the most common inpatient procedures — and one out of six hospitals charges $90,000 or more, according to an Axios analysis of 2016 federal health care data.
The bottom line: Hospitals set prices for any test or procedure at whatever level they want, often well above what Medicare pays. While those prices often aren’t what patients pay, they still help dictate what society at large pays for health care.
The background: Large variation in hospital pricing has been understood for several years. The concept gained more awareness in 2013, when Steven Brill published a TIME article about hospital charges that eventually led to the federal government releasing data on hospital and physician payments.
New studies have shown how market concentration factors into pricing.
- Hospitals have argued that charges are misleading because private and public health insurers don’t pay those amounts, which is true.
- But they still matter a lot. List prices often are starting points, with no relation to cost, that are used in negotiations with private insurers. They also are the baseline for uninsured patients and people who have to deal with out-of-network bills — like this week’s infamous case of a teacher in Texas.
How we did this analysis: We combed through and combined spreadsheets of hospital charges and Medicare payments, which the Centers for Medicare & Medicaid Services posts annually.
What we found: For joint replacements, like hip and knee surgeries, prices are still all over the map. However, Medicare pays less than $13,000 on average for a joint replacement.
- For-profit companies own (or used to own in 2016) nine out of the 10 hospitals with the highest list prices for joint replacement surgeries.
- Memorial Hospital of Salem County, a small hospital in New Jersey owned by the publicly traded Community Health Systems, had the highest joint replacement price in the country in 2016 at $267,726. CHS submitted a statement but did not explain the rationale for its charges.