Operations in hospitals that are part of the network are more expensive than in independent institutions.

Surgical procedures at network hospitals are much more expensive than at independent hospitals, and this trend continues for 15 out of 16 surgical procedures analyzed in a new study published in JAMA Network Open.

Higher cost surgeries included shoulder arthroscopy with cartilage removal, diagnostic colonoscopy, and prostatectomy. For example, the median cost of shoulder arthroscopy was 1.68 times higher in network facilities compared to independent hospitals ($4,432 vs. $2,643).

There was also a wide variation in contract prices for procedures, with the median price of a prostatectomy reaching $9,567 at network hospitals compared to $8,601 at independent facilities.

The figures were obtained from the contract prices of 3,195 hospitals using the Turquoise Health database, which aggregates price data published by hospitals in accordance with the price transparency rule.

WHAT IMPACT

In 2021, the Centers for Medicare and Medicaid Services enacted the Hospital Price Transparency Rule to increase price transparency and increase access to healthcare services. The policy requires federally funded hospitals to post prices for numerous medical services, including the 16 surgical procedures described in JAMA.

According to the authors, these prices have attracted increased scrutiny from federal regulators, who are evaluating trade-offs in hospital mergers and consolidations.

It remains unknown, they said, whether contractual rates differ between independent and network hospitals. On the one hand, institutions that are part of a hospital network may have a larger market share, which allows them to negotiate higher rates with payers. On the other hand, network affiliation can provide economies of scale, with large networks providing services at lower prices.

BIG TREND

The authors argue that in some cases there may be relevant reasons why prices for these procedures vary across hospitals and why they cannot be identified with raw price data. They attempted to mitigate these differences by applying the region’s CMS wage index to account for factors that help determine appropriate health care prices.

“As more hospitals comply with this policy,” they wrote, “it will be important to better understand the mechanisms underlying these significant differences in contract prices for surgical care in order to identify areas of unreasonable variance that can be mitigated.”

Outpatient surgical centers are gaining momentum and offer a less expensive alternative, Kemal Erkan, chairman of the board of the American Center for Surgery, said in August. On average, gallbladder surgery costs $12,000 at a hospital, while the same procedure costs $2,200 at a surgical center, Erkan said.

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