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They charged what? Price of surgical procedures vary widely by hospital, patient

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Surgical tools are seen
Surgical tools are seen on a table on April 18, 2018.
Leon Neal | Getty Images File

If you've had spinal fusion surgery in Minnesota, the hospital may have charged as little as $12,000 for the procedure — or as much as $80,000. That's one of the findings of a study released by the Minnesota Health Department Thursday. 

The report not only found huge variations in the prices charged among hospitals but even wide swings within individual hospitals, for a single procedure. 

For this report researchers looked at what hospitals charged for four fairly common procedures over the period from July 2014, to June 2015. 

Their findings echoed a similar report they released in January. They found huge swings in prices charged for the same procedures at different hospitals. 

But this study also found big variations in charges for the same procedure within individual hospitals. 

For operations like an appendectomy or spinal fusion surgery, "two patients in the same hospital receiving the same service, their payer may be paying radically different prices, so varying sometimes by tens of thousands of dollars," said State health economist Stefan Gildemeister, who co-authored the report.

Prices charged at the most expensive hospital for major bowel surgery, for example, ranged from less than $15,000 to nearly $69,000 — nearly a five-fold difference. 

And that's after accounting for factors like the severity of a patient's illness or how long they stayed in the hospital. 

The report didn't explain why there were such large variations. But Gildemeister said national research shows the market power of hospitals and insurance companies plays a big role. 

"An insurance company with a really large book of business, that brings a lot of patients to a hospital, that insurer can probably negotiate discounts that are much greater than a small [insurer] that absolutely needs that hospital in its network in order to be certified and conducting business," he said. Department of Health commissioner Jan Malcolm said the lack of transparency about prices being charged contributes to the rising cost of health care. 

Wendy Burt with the Minnesota Hospital Association, said there are ways for consumers to get more information about how much they'll have to pay out of pocket for a procedure. She said the best way is to ask your insurance provider, which negotiates different plans with different employers.

"I do think that emphasizing the variation, and displaying the highest amount paid to the lowest amount paid, is a bit sensationalizing it, as opposed to just showing an average," she said. "I also think that the emphasis on just the provider misses the role of the insurer as well, and what the insurer will pay. "

Patients with insurance often don't have to worry about big differences in what hospitals charge, because their insurance pays the bulk of the cost. But high deductible health insurance plans are becoming more common, which means consumers are often on the hook for a growing share of the price tag. 

"At the end of the day people are paying," said Carolyn Pare, president of the Minnesota Health Action Group, a coalition of public and private buyers of health insurance.

"It's a misnomer to think that insurance companies pay, because at the end of the day the insurer will increase premiums in order to make up for the losses that it sustains if it pays a lot out in claims," she said.  

The state health department said the report shows a health care market that's not working well for consumers — and hopes the new research gives policymakers and others some leverage to improve it. 

Pare believes the department of health reports are a good step towards more transparency, which she said can help lead to more rational health care pricing. The next step she said is to release the names of individual hospitals — which state law currently prohibits. 

"So we still can't discern between the high-cost providers and the low-cost providers. If you could you could make choices around where you sought care based on not only what you could afford but what the quality of that institution was," Pare said.