Competition for care By JEFF KATZ / Aggie Staff Writer Posted 01/13/2005 A smart consumer is said to be someone who shops around. And a recently passed law aimed at controlling rising health care costs now gives the public the opportunity to potentially save money when choosing a hospital. Written by state Assembly Majority Leader Dario Frommer (D-Glendale), Assembly Bill 1627 requires all licensed general care hospitals and psychiatric hospitals to make pricing information public through their "chargemasters," the collection of all prices for hospital procedures and medications. Starting in July 2005, all hospitals must additionally submit updated chargemasters to the Office of Statewide Health Planning and Development to monitor changes. The law, however, does not require hospitals to explain their pricing procedures. Locally, to help establish more uniform price changes, the Sutter medical group began a new program at Sutter Davis on Jan. 1 which examines initial cost and yearly mark-ups to build consistency within departments, while remaining competitive with other hospitals. While patients can now determine surgery cost beforehand, some say the required public disclosure by hospitals won't necessarily cause executives to lower prices. "We don't think that this by itself will resolve the issue, but it does provide the roadmap for major healthcare reform," said Anthony Wright, executive director for the statewide health care consumer advocacy group Health Access. "I think when we look at these chargemasters and [see] fairly wide variation in prices between hospitals right next to each other…it will help guide our ability to provide remedies to try to deal with hospital costs." Karen Kim, a spokesperson for Frommer, said the bill's goal was to inform patients they have a choice in hospitals, and those choices could mean monetary differences for both the insured and uninsured. "Mr. Frommer wanted to make a change across the board to disclose the secrecy of hospital pricing," Kim said. "Knowledge is power, so for consumers to have more knowledge is great and certainly acts as a deterrent for any sort of pricing gouging that may be going on." Following a federal investigation regarding hospital prices nationally, Frommer introduced the bill in 2003 amid reports of unscrupulous hospital charging in California. "We started looking into [these reports] and found that hospitals had no requirements to disclose what they charge for different procedures and those amounts could vary between hospitals," Kim said. A look at the chargemasters between local hospitals Sutter Davis and UC Davis Medical Center shows similar differing situations. At Sutter Davis the list price for a basic two-view chest x-ray is $329, but at UCDMC the cost for the same procedure is listed as $451.50. Jeff Sprague, chief financial officer for Sutter's Sacramento Sierra region, attributed price differences between hospitals to budgeting issues in the past. "If you pick any single line item, we may be higher or lower because over the years another hospital might have, say, raised lab fees but not radiology or raised room rates, so you get some inconsistencies on the line-item basis," Sprague said. In the Sutter system, charges are initially set when a drug or procedure is first used at the hospital, a number based upon costs, input and the market at that time, Sprague explained. But the charges usually increase annually with respect to competitor price increases. Although Sprague says that Sutter has not seen a great influx by the public wishing to review the chargemasters since the law came into effect in July 2004, he also noted shopping around for hospital coverage may not be so simple. "People may come in and say 'I'm going to have a surgical procedure, what are the charges going to be?' but that depends on any complications or other kinds of clinical activity that takes place, and that all can greatly impact charges," Sprague said. "In the end, no clinical event is always the same." JEFF KATZ can be reached at city@californiaaggie.com |