A study that used “secret shopper” techniques to find out the price of a hip replacement in hospitals across the US finds a huge variation in price, by as much as a factor of ten, with many hospitals contacted not able to give an estimated price.

Reporting in the 11 Feburary online issue of JAMA Internal Medicine, researchers at the University of Iowa (UI) Health Care and Iowa City VA Medical Center say their findings highlight the difficulties American consumers face when trying to obtain prices for a common surgical procedure.

Consumers can get their hands on information about hospital quality reasonably easily in the US, but information on pricing is much harder to come by, according to the study, which suggests efforts to achieve greater transparency in pricing have largely been ineffective.

Lead author Jaime Rosenthal says in a statement:

“There have been many initiatives to increase pricing transparency, including state and federal laws, and still many hospitals are unable to provide price information for a common procedure.”

Rosenthal, currently a senior at Washington University in St. Louis, conducted the research as a summer project at UI Carver College of Medicine.

For their study, the researchers randomly selected two hospitals from each state of the US, plus the District of Columbia, that performed total hip replacements. They also included 20 top orthopedic hospitals from the U.S. News & World Report rankings.

To find out what the hospitals would charge, Rosenthal pretended to be enquiring on behalf of a fictitious patient, a 62-year-old grandmother with no health insurance who would be paying for the procedure herself.

Rosenthal asked each hospital to provide the lowest “complete” price (that is physician plus hospital fees) for an elective total hip replacement.

When the hospital was only able to give an estimate for the hospital fee and not the physician fee, the researchers contacted an orthopedic surgery affiliated to the hospital to get an estimate of the physician fee.

The researchers contacted each hospital up to five times to get a quote.

The results show that 40% of the top-ranked orthopedic hospitals and 36% of those not in the top rankings were not able to provide an estimated price for a total hip replacement.

Plus, of those that could give an estimate, there was a tenfold difference between the lowest at $11,100 and the highest at $125,798.

Rosenthal describes the variation as “striking”, particularly as they “tried to give each hospital identical information in terms of what the procedure would require”.

Only 9 of the 20 top-ranked hospitals (45%) and 10 of the ones not in the top ranking (10%) were able to give a completed bundled price for the procedure.

The researchers were able to compile complete prices for another 3 top-ranked (15%) and 54 non-top-ranked (53%) by contacting the hospitals and the affiliated physician surgeries separately.

Putting these results together, the complete price ranged from $12,500 to $105,000 at top-ranked hospitals and from $11,100 to $125,798 at non- top-ranked hospitals.

The researchers couldn’t find any specific hospital characteristics or reasons for why the higher prices were higher and the lower ones were lower, although they concede that their study only sampled a small number of hospitals.

Senior author Peter Cram, UI associate professor of internal medicine and director of the Division of General Internal Medicine, says:

“A big finding was the absolutely huge variation in price estimates.”

“We believe that our results highlight the reality that hospitals have a very hard time knowing their own prices,” he adds.

Rosenthal says the huge range in prices that they found suggests a “savvy” consumer would be able to shop around and make some significant savings.

“Our study suggests that it is important for consumers to ask for information about the cost of medical care and procedures and to be persistent,” urges Rosenthal, adding that the message for policy makers and hospital managers is that they have a long way to go to improve their pricing transparency.

In an accompanying invited commentary, policy researchers Andrew Steinmetz and Ezekiel Emanuel of the University of Pennsylvania in Philadelphia, liken the current state of the US healthcare system to that of the retail car industry in the 1950s, where prices varied hugely among dealers, depending on what “exorbitant” charges were added for shipping, “preparation fees”, and other spurious reasons without the buyer’s knowledge.

“There is no justification for the inability to report a fee estimate, or a 12-fold price variation for a common elective procedure like a hip replacement,” they write, predicting that eventually, healthcare providers will be travelling down the same path as the one car dealers were forced to take, with federal laws brought in to get them to disclose full pricing information.

Funds from the National Institutes of Health helped pay for the study.

In November 2012, a surgeon with the Loyola University Health System described using a new hip replacement strategy, an anterior approach technique, that allows the patient to experience less pain, have a quicker recovery, and improved mobility.

Written by Catharine Paddock PhD