Hospital birth costs vary wildlyNews added by Benefits Pro on January 17, 2014

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By Dan Cook

One might think that, after eons of experience with delivering babies, society would have at last arrived at some consensus about what most births cost. Sadly, a new study says such is clearly not the case, at least for hospitals in California.

What’s worse, the yawning chasm between the cost of a birth from one hospital to another appears to be mostly a random phenomenon not tied to actual costs.

This news comes from researchers with the University of California at San Francisco. The project had several funders, including the Robert Wood Johnson Foundation, National Institutes of health and UCSF. Data collected came from all privately insured patients admitted to California hospitals for uncomplicated births in 2011. Data from more than 100,000 births was analyzed.

Its objective was “to examine the between-hospital variation of charges and discounted prices for uncomplicated vaginal and cesarean section deliveries, and to determine the institutional and market-level characteristics that influence adjusted charges.”

“After adjusting for patient demographic and clinical characteristics, we found that the average California woman could be charged as little as $3,296 or as much as $37,227 for a vaginal delivery, and $8,312–$70,908 for a cesarean section depending on which hospital she was admitted to.”

The researchers continue: “This implies that, after adjusting for patient characteristics, the highest hospital charge was more than 11 times that of the lowest hospital charge for vaginal births, and more than 8.5 times that of the lowest hospital charge for cesarean section births. Without adjusting for patient characteristics, the hospital with the highest charges would charge about 13 times more than the hospital with the lowest charges for vaginal births, and about 9 times more than the hospital with the lowest charges for cesarean sections.”

The disparity could be attributed in part to different markets and differences in hospital wage structures, the study said.

“We found that hospitals in markets with middling competition had significantly lower adjusted charges for vaginal deliveries, while hospitals with higher wage indices and casemixes, as well as for-profit hospitals, had higher adjusted charges. Hospitals in markets with higher uninsurance rates charged significantly less for cesarean sections, while for-profit hospitals and hospitals with higher wage indices charged more. However, the institutional and market-level factors included in our models explained only 35–36 percent of the between-hospital variation in charges.”

In other words, there was a huge gap left after such factors were considered that could only be called “random” by the researchers.

“On the basis of findings from the existing literature, we hypothesise that the variation we find is more likely random than due to unobservable hospital characteristics…. The troubling part of this largely random variation is that charges do still matter to patients and to hospitals in many ways. The 41.9 million uninsured Americans along with privately insured patients visiting an out-of-network hospital may be faced with the full charges for their care, which are typically so high that few patients can pay them, resulting in need for charity care, sliding scale payments or often bad debt on the patient's part. …

“Our findings indicate that the charge faced by a patient for a common obstetrical procedure is significantly influenced by institutional and market-level factors outside of her own presentation, but that the majority of variation in charges between hospitals she could visit remains unexplained. Our results also suggest significant room for improved methodologies, incentives and policy interventions for accurately estimating and presenting charges and ultimate costs,” the study concluded.

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