News Release

San Francisco, CA – Need to schedule a knee replacement? How about a c-section? A new report by CALPIRG Education Fund found large discrepancies between what California hospitals charge for common surgeries, such as cesarean-section births and knee replacements. The significant price variations, which appear unrelated to quality of care, could provide important insights into how to lower the rising costs of health care in California.

The report, Your Price May Vary: Geographic Variation in Hospital Charges in California, examines statewide data from the California Common Surgeries and Charges Comparison database – a record of the prices charged by hospitals for common, elective, in-patient surgeries widely performed at hospitals across the state.

“Overcharges are unacceptable for a service as important as health care,” said Daniela Uribe with CALPIRG Education Fund. “Consumers, whether it’s on their own or through higher insurance premiums, shouldn’t be paying 250% more for the exact same surgery at different hospitals.”

The report found that:

• Surgery charges were 2.7 times more expensive in the highest cost region vs. the lowest cost region. Surgery charges were highest in the Alameda and San Mateo areas. The Fresno and Orange County regions charged the least.
• San Jose-area hospitals charged an average of $144,900 for angioplasty, while Bakersfield hospitals charged $44,400.
• The typical patient in the San Mateo region was charged nearly $48,000 for a Cesarean section. The typical patient in the Fresno region was charged less than $13,000 for the same surgery.

 “According to this data, a pregnant woman in the Bay Area could take a private jet to Fresno, stay at the nicest hotel in the city, and still save thousands of dollars on her birth,” said Ms. Uribe.      

Even within the regions, prices widely differed. Here in the Bay Area:

• The most expensive planned c-section surgeries were at Seton Medical Center, which charged $54,866, in comparison to $21,498, at Santa Clara Valley Medical Center.
• The most expensive knee replacement surgeries were at Regional Medical Center of San Jose, which charged $165,200, in comparison to $59,824 at Alameda Co. Medical Center—Highland Campus.

Other research has concluded that price variations are not correlated to the quality of care or patient income or health status. Additionally, cost of living differences by region only partially explain the regional variations in common surgery charges. Rather, research suggests that variation in charges could have more to do with which hospitals have more leverage and greater market power, particularly with the insurance industry.

“In health care, higher prices do not reflect greater value,” continued Ms. Uribe. “Consumers deserve clear, easy-to-access information about both the cost and quality of care in order to make sound judgments about their health.”  

Exploring variations in the charges for providing health care is potentially one of the most effective ways to identify cost-saving strategies and put pressure on high-cost providers to do business in a way that is more economical for their patients and insurers. CALPIRG Education Fund recommends:

• The state of California should make information about both the cost and the quality of care at each hospital accessible to consumers and policymakers.
• Hospitals should disclose their accepted payments and discounts, rather than just their “sticker price” for common procedures, to enable consumers to shop around and to enable policymakers to better understand how California might control the cost of providing quality health care. 
• Researchers and policymakers should further study the differences in both the charges by hospitals, as well as the actual cost of providing care at those hospitals, in order to improve our ability to provide quality care at a reasonable cost.

“At a time when health care costs are rising much faster than inflation or wages, we have to get costs under control and protect patient health at the same time, concluded Ms. Uribe. Figuring out why the prices are so different between hospitals could be a key to improving efficiency and lowering costs in the future.”