Texas researchers found that average prices were highest at Houston Methodist Hospital

Houston researchers are beginning to compare hospital prices using newly available data – a key step that experts say will help lower overall health care costs.

A study published last week by Rice University’s Baker Institute for Public Policy analyzed the prices associated with two health insurance plans, Blue Cross Blue Shield and UnitedHealthcare PPO, across three major institutions – Houston Methodist, St. Luke’s Health and Memorial Hermann – and found wide -ranging costs for services.

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The price of an open-heart surgery on a UnitedHealthcare plan is $ 129,866 at Methodist but only $ 60,066 at Memorial Hermann and $ 54,766 at St. Luke’s, the study found. Psychoses admissions on the same plan cost $ 18,170 at Memorial Hermann, $ 16,605 at St. Luke’s and $ 3,728 at Methodist. Researchers found that average prices were highest at Methodist among the three hospitals.

Rice University health economist Vivian Ho, who completed the study with student intern Grace Kneidel, hopes employers can use the data to arrange employee health plans that more accurately reflect the cost of services, rather than sharing uniform costs for all providers. That could include offering tiered pricing, in which consumers take on more of the cost for coverage at a higher-priced hospital.

“That will make large numbers of customers price sensitive, which will force the highest-price hospitals to lower their prices,” said Ho. “The problem now is that the hospitals see customers are not price sensitive, and so therefore, they keep raising their prices.”

Ho also serves as a faculty member at Baylor College of Medicine, which is affiliated with St. Luke’s, and she is a member of the community advisory board at Blue Cross Blue Shield. She said those positions did not interfere with her work di lei, which she said was an objective analysis of publicly posted information.

“It’s not as if I hid any prices when I’m doing the analysis,” she said. “… What I really care about is trying to get health care costs lower, and if St. Luke’s had high prices I would have no hesitation about reporting that.”

The study reflects only the prices for Blue Cross Blue Shield and UnitedHealthcare PPO plans for the three hospitals. The researchers could not compare services for other hospitals or plans, because providers have been slow to comply with new federal regulations requiring them to publish their prices. The Texas Hospital Association previously told the Chronicle that posting the information is complex and takes time.

The rules, published in 2019, include a requirement that hospitals post a machine-readable file on their websites containing the price charged to cash-paying customers for 300 services, as well as the minimum and maximum rates the hospital has negotiated with insurers. About 65 percent of hospitals nationwide have posted files with negotiated prices, according to a report published Tuesday by the price transparency startup Turquoise Health Co.

Ho and Kneidel could locate prices that all three TMC hospitals negotiated with Blue Cross Blue Shield for 139 different services, and with United for 71 services. They organized the available data in a spreadsheet and found that Methodist on average charged $ 49,000 for services covered by Blue Cross Blue Shield and $ 59,000 for services covered by United. Memorial Hermann reported the second-highest average prices, charging $ 30,000 for Blue Cross Blue Shield plans and $ 28,000 for United. St. Luke’s charges an average of $ 20,000 and $ 24,000 for services covered by the two plans, respectively.

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Methodist could be highest, the study authors noted, because it charges more for higher-priced services. For instance, the price of a spinal fusion is $ 98,640 at Methodist, while Memorial Hermann charges $ 57,629 and St. Luke’s charges $ 52,788. I also noted that it’s not clear whether those costs include ancillary services around a specific procedure.

In a statement, Methodist said the study offers a limited example of its charges, some of which are lower than other area hospitals.

“What it does not do is consider the value our patients and payors are getting by choosing Houston Methodist,” the hospital said. “We are consistently ranked as one of the best hospital systems in the country and the No. 1 hospital in Texas. We are ranked at the top by numerous health care companies and public agencies, including Medicare. And as a result, our negotiated rates with payors reflect the value of care Houston Methodist provides – which is unparalleled quality outcomes for their members. “

Consumers might reach different conclusions about pricing, depending on which data points they focus on. For Blue Cross Blue Shield enrollees, St. Luke’s is the lowest-priced hospital for 91 percent of services available for comparison, the study found. For United enrollees, St. Luke’s was the lowest-priced hospital for only 48 percent of services, while Methodist was the lowest-priced for 44 percent of services.

If prices vary so greatly, the authors wrote, “employers need to think long and hard about whether they should be charging their employees the same co-payment regardless of which hospital they choose for care.”

Many large companies have an incentive to lower health care prices, because the cost often comes out of their own budget, said Dr. Morgan Henderson, principal data scientist at The Hilltop Institute at the University of Maryland, Baltimore County, a research nonprofit that uses data analysis to inform health policy.

Price comparisons like the Rice study could give those employers the ability to influence negotiations that previously were shrouded in secrecy, he said.

But it will take time.

“This is not immediately doable, but hopefully in the next five to 10 years, it is doable,” he said. “Because it is a very complicated landscape.”

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