Thursday, August 18, 2011

So cheap, I'll take two.

WBUR/CommonHealth reporter Rachel Zimmerman went shopping recently for a pelvic ultrasound.  She summarizes the results on a great new website called Healthcare Savvy.  Here's an excerpt:

I called each facility, and here are the prices I was quoted for a pelvic ultrasound:
–Mass. General: $2847 or $2563 (more on this later)
–Mt. Auburn: $971.96
–Diagnostic Ultrasound Associates: $516

All three quotes were for the imaging only and did not include professional services or other additional costs, I was told.

So, is it just me, or is a five-fold difference in price for the same procedure at three greater Boston facilities kind of shocking?

I called MGH back to make sure I heard right. Weirdly, on Wednesday, the ultrasound price was $2,847, but on Thursday it was $2,563. (Do I hear $2,000?) I called the hospital’s PR office for a comment on why it costs so much more. Here’s the statement they sent me from Sally Mason Boemer, Senior Vice President of Finance: “MGH typically benchmarks our gross charges with like institutions and find our charge levels to be consistent with other urban medical centers that have a significant amount of complex care, teaching and research missions, and a high uncompensated care burden.”


Barry Carol said...

I think it would be enormously helpful if referring doctors had information about actual contract reimbursement rates for hospitals, imaging centers, specialists and other providers readily available to them in a user friendly format. It would be even more helpful if they perceived both an ethical and fiduciary duty to patients to refer them to the most cost-effective provider that can competently do what needs to be done even if that provider is not part of the institution that the doctor happens to work for. Perhaps greater use of capitation and bundled payments instead of fee for service could move us in this direction.

Anonymous said...


I think only your last sentence has even a prayer of bringing your wish, however rational, to fruition. When I had to have an MRI last year, I asked my doctor where to go. We both knew, in general terms, that hospital-based providers are more expensive. What I wanted to know was which private provider was competent and which ones weren't. His answer was couched in those terms.
So, I confess, even though I am an M.D. and was paying the bill out of pocket (10K deductible), I went to the one place he mentioned and just hoped it would be reasonable. (It was, sort of.) If I had it to do over again, I would be more cost-conscious and ask for 3 names to compare.
But asking the Dr.'s office to be the keeper of that sort of cost information, given the fact that everyone has different insurances, different coverage, and the prices would be always changing, I fear is way too much to ask. The doctors, understandably so, are more concerned whether they themselves will be paid.

nonlocal MD

Anonymous said...

Oh, and Barry, I forgot to mention - my MRI (remember, I paid full price) was half the cost of the Partners' charge for an ultrasound. Given the difference in cost of the equipment (US is way cheaper), that is astounding.


Barry Carol said...

nonlocal –

As an optimist (sometimes), I think it would be technically feasible to provide the comparative price information. The doctor may just need to provide the codes and the name of any provider he would NOT recommend no matter how little they charge and a member of his staff, probably the billing person, could actually work with the patient to see who has the best price. Insurers, for their part, could simplify their offerings so there aren’t as many permutations and combinations, at least from a reimbursement standpoint. Finally, if we had price transparency, the patient could go to the insurer’s website and, armed with the appropriate codes or other terminology for the required service, test or procedure, put in his zip code and get a list of providers within a certain radius and their reimbursement rates for his particular policy.

A friend of my wife’s, who lives in the Midwest, needs to get a brain MRI periodically. Her regional AMC charged about $4,000 a couple of years ago. Her local community hospital charged $2,300 last year. She got her most recent one at a non-hospital owned imaging center for $659. As it happens, I had the same test in December, 2009 at a non-hospital owned imaging center in downtown Manhattan. The list price was $1,800 and they accepted $475 from my insurer as full payment of which my share was 20% or $95. Even though I asked, my neurologist could not tell me the cost ahead of time. What a crazy system. We can do a lot better.

Vermont thinker said...

While this kind of pricing does seem calculated to drive people to distraction, the reality is that these differentials are driven in large part by a payment system that makes no sense. If a hospital is paid 50% of its costs by public programs - like Medicaid - to care for their beneficiaries, then those costs must be shifted onto payers that are actually price-sensitive. Historically, that has meant commercial insurers, who then pass those excess payments along to their insureds in the form of higher premiums. (In today's environment, that is becoming harder to do.) The result is that hospitals and doctors often set prices based on who is paying, rather than on what the underlying cost for a procedure or service is.

In the end, while wildly unfair, these pricing problems are more a symptom of a broken payment system than its cause. Rather than wasting a lot of time and energy over price transparency, I'd rather see a serious push - as is happening in many states, like Vermont (where I live) - for changing how we pay for health care at the systemic level. A long as fee-for-service payments dominate, we will face these issues.

Thomas Pane said...


I agree these pricing oddities are a symptom of the larger problem, but I don't think that fee-for-service is the cause. We've taken a long time to get to this point, with price distortion worsening over decades.

It won't happen overnight, but if we see greater cost-shifting with high-deductible insurance plans and HSAs, patients will want to know their costs. Facilities will have to figure out what the real price is and apply it.

Paul-- Any idea if MGH will run a Groupon deal on ultrasounds? Then they'd only be $1424.

($1282 on Thursdays)

Vermont thinker said...

Thomas Pane -

"Real prices," linked to true costs, won't happen until every single payer agrees to pay those costs. Medicaid programs would have to move from being price-setters to becoming fair payers, which isn't likely to happen soon given the pressure on state budgets. (As an example, in Vermont, the state agency that oversees hospitals estimated in 2009 - the most recent year for which these data were analyzed - that Medicaid would underpay hospitals by more than $110 million. [See])

Why do you think that stand-alone imaging centers can afford to charge (and collect) prices far below those of hospitals? It's because they do not serve large numbers of Medicaid or charity care cases. Their underlying costs, therefore, do not have to reflect that overhead, which we've been content to let our non-profit hospitals shoulder almost unilaterally.

Using market mechanisms to drive patients to lower-cost imaging centers (or ambulatory care centers, or for that matter any other non-comprehensive service provider) simply makes it harder for hospitals to offer the full range of services they do without cranking up their prices.

It's a death spiral of sorts. And while some may be content to let full-service hospitals collapse under the weight of today's chaotic financing mechanisms, allowing that to happen raises a host of other issues, primarily as to access.

Not an issue in urban areas, perhaps, but it's a big deal in rural areas.

Thomas Pane said...


You make a good point on the 'death spiral' caused by the necessary cost-shifting required by entities that take on underfunded/unfunded care. Right now that is done primarily by increasing volume, which isn't good for many reasons.

I've been thinking for a long time on how we can come up with a system that gives everyone timely access to high-quality care without rationing. I haven't figured it out yet.

I agree that collapse of full-service hospitals is a major issue in rural areas. But even urban areas feel the impact, as noted in NY when St. Vincent's folded.