Patients Struggle to Navigate Maze of Hospital Costs

AUSTIN – Walter Simonds went to the emergency room on a Saturday night in February with a stabbing pain in his right side. After two hours at Seton Medical Center Austin, Simonds learned he had a large kidney stone.

Seton billed Simonds, a self-employed writer who is uninsured because of the high cost of individual coverage, $8,716 for the 128 minutes he said he spent mostly waiting in the ER. That works out to about $68 a minute and does not include the $887 Simonds had to pay the ER doctor or the $330 he paid a radiologist to read his $7,200 CT scan – about double the cost of a CT scan at St. David’s Medical Center, according to the charge-comparison website

It would end up costing him $7,562 more for a procedure to crush the stone someplace else – an amount Simonds said he “happily paid.”

But his outrage over his ER bill took him on one of the most high-blood-pressure-inducing journeys a patient can take: trying to understand hospital costs.

As state and federal leaders call for curbs on rising health care costs and as more consumers pay higher co-pays and deductibles, experts advise patients to find out their costs before seeking care.

Though that is unlikely to occur in an emergency, even the savviest consumers with time to value-shop are easily stymied.

Nationally, there is a move toward greater transparency in hospital costs, but hospitals are not leading it. Hospital officials say posting their prices, even an average cost for a particular procedure, would be more confusing than helpful to consumers because many factors determine cost.

“The real cost of health care is one of the best-kept secrets in America,” said Lisa McGiffert, a senior health policy analyst at Consumers Union.

U.S. health care costs climbed to nearly $2.6 trillion in 2010, more than 17 percent of the economy. Those costs are expected to consume 20 percent of the economy by 2020, according to an April article in the Journal of the American Medical Association.

“Our history of deeply insulating consumers from the costs of their healthcare choices … bear[s] at least some of the blame for year-after-year double-digit growth” in costs, says a February white paper by Thomson Reuters, an information company that covers the health care industry.

“We are asked to be good consumers of health care,” said Dr. David Goodman, director of the Center for Health Policy Research at the Dartmouth Institute, “but because the cost of health care has risen so dramatically and an increasing proportion of the population is vulnerable to costs … what was once an afterthought may be whether you declare bankruptcy or not.”

Goodman, who also is co-director of the Dartmouth Atlas of Health Care, which analyzes medical costs across the U.S., called it “a scandal” that most hospitals don’t reveal their prices. “What other goods and services do we purchase blindly like health care?” he said.

St. David’s HealthCare, the second largest hospital system in Central Texas, has cost information online, but it is for uninsured patients, and the cost ranges can be wide.

A hospital stay for an uninsured person with pneumonia at St. David’s Medical Center, for example, ranges from $4,550 to $11,370, the site says.

People without health coverage lack the leverage insurers have to negotiate prices and often are billed more for care. St. David’s and the Seton Healthcare Family said they give discounts to the uninsured.

St. David’s tells insured patients seeking cost information to call the hospital.

Seton and Scott & White Healthcare don’t put prices on their websites. Doing so would confuse patients because of varying types of coverage, differences in patients and the possibility of complications jacking up the cost, officials said.

“The cost of health care is, unfortunately, very complicated,” said Greg Hartman, a Seton executive and president of Seton Medical Center Austin. He added that Simonds’ charges were “appropriate” for the Austin market.

The Thomson Reuters paper says health care costs for the same procedure in the same market can vary widely. Reducing such variation in prices for the 108 million Americans with employer-sponsored health insurance could save up to $36 billion a year, the paper says.

The state publishes the average list price, or charges, online for various hospital procedures through the Texas Health Care Information Collection. The charges are what hospitals bill patients, although almost no one pays that amount because of negotiations with insurance companies and discounts given to uninsured patients, hospital officials said.

Charges, therefore, are different than patient costs, but for now, that is one of the few sources of information readily available to consumers.

The information collection, which provides mortality and other health care quality measures on selected procedures, shows big differences in average charges from one hospital to another.

A Statesman analysis of 2009 charges at nonspecialty acute care hospitals in the Austin area, the most recent year for which state data are available, shows, for example, that a heart artery bypass graft ranges from a low charge of $70,377 at the Hospital at Westlake Medical Center, which did 17 bypasses in 2009, to a high of $195,296 at St. David’s South Austin Medical Center, which did 209.

For congestive heart failure, Johns Community Hospital, now Scott & White Hospital-Taylor, charged a low of $11,139; the high was $58,027 at Seton Medical Center Austin.

Overall among acute care hospitals in the Austin area, South Austin Medical Center had more high charges than any other, coming out most expensive on seven of 16 common or complex procedures the Statesman examined. The small Johns Community Hospital had the lowest charges on five procedures – more than any other.

Hospital officials said they don’t think comparing facilities based on charges is very helpful to consumers, though the state’s information collection website says, “Hospital charges per stay may offer a useful benchmark to patients for comparing the relative costliness of conditions.”

Consumers need to be armed with “clear, comparative information” on costs, the Thomson Reuters paper urges, but “price transparency is one area where information is especially lacking.”

ERs are among the costliest places to get care, including scans, but patients who go there often don’t have much choice.

For scheduled hospital visits and procedures, officials said they try to provide patients who call with the most accurate price based on the person’s insurance coverage. But to compare one hospital’s costs to another – even in the same network – requires a call to each facility, a difficult, time-eating process. Nor is it easy to understand the bill afterward. Neither Seton nor St. David’s sends out itemized bills unless a patient requests it, as Simonds, 44, did.

“Why can’t we do better? It’s complicated,” said Wes Fountain, a chief financial officer at two St. David’s hospitals.

He and officials at other hospitals said patients can speak with doctors and insurers to get more information, although McGiffert said, “Doctors tend to be pretty uninformed about costs.”

An increasing number of insurers are taking the lead in helping their members comparison-shop. Two of the largest in Texas, Blue Cross Blue Shield of Texas and UnitedHealthcare, are among those providing estimates of out-of-pocket costs at hospitals in the market. They also provide quality comparisons, such as mortality rates.

“People want to find the best deal they can afford,” said Shannon Stansbury, vice president for health care delivery at Blue Cross.

In recent years, some websites have sprung up to help consumers, including Fair Health, which provides price quotes by ZIP code for various procedures.

Typically, there are big differences in what hospitals charge for care and what the care actually costs because of cost-shifting and other factors, an indicator known as the cost-to-charge ratio. The lower the ratio, the larger the profit margin, although there are caveats. Costs could be unusually low at the facility.

The American Hospital Directory, a company that compiles and shares hospital data, provided 2010 cost-to-charge ratios to the Statesman for all Texas hospitals. Among general hospitals in the Austin area, South Austin Medical Center had the greatest gap between the cost of care and what the hospital actually charged. There, the hospital billed $1 for every 17 cents it cost to deliver care, compared with $1 per 49 cents in costs at Scott & White-Taylor, which had the smallest gap between costs and charges.

Asked about the ratio at South Austin, Fountain said there could be many reasons, including high numbers of uninsured patients who arrive sicker because they haven’t been seeing a primary care doctor.

“We are pretty proud of the patient experience we provide” at South Austin, he said.

Care is not necessarily better at higher-priced hospitals, experts said. “In fact,” Thomson Reuters wrote in the February paper, “lower-priced hospitals are often associated with high quality scores.”

Under the federal health care law, government payments to hospitals are being linked to quality of care and patient satisfaction.

Simonds was irate after his experience at Seton.

He got an automatic discount of 21 percent off $11,034 in charges, bringing his bill to $8,716. Seton tries to link uninsured patients to coverage and has helped 35,000 since 2009, officials said, but Simonds’ income was too high to qualify.

He was told that if he paid it all in a lump sum by Aug. 1, he would receive a greater discount, bringing his bill to $5,666, he said. He paid it.

“I suspect that if I had not resisted for months, they would not have budged an inch,” he wrote in an email.

“If a restaurant were run like Seton,” Simonds said, “the menu would have no prices, the waiter would bring you appetizers you didn’t want and bill you $1,000 per appetizer, and they would send you to another restaurant for the entree.”