Thursday, May 9, 2013

Hospital charges vary among the US hospitals

in our MBA class we have to write our own blog posts, and since this post (mine) is related to doctors' finances, I decided to repost it here, with some additional commentary:

LA Times from 5/8/13 published the article reporting on the  newly-released government data on hospital charges. As it was expected, they range widely for the same type of conditions even within the same city or a region.  (for example , charges for treating a pneumonia without complications can range from $17,000 to a whopping $70,000 in the L.A. area.
Sure thing, for us hard-nosed business statisticians it's not enough to know this. What we need to know if the patients those hospitals treated( and billed...) are comparable. For example, are they more or less the same age? Weight? Number and severity of other health conditions? Also, are costs comparable? (healthcare labor force in, say, New York City is very expensive for a variety of reasons. Also- operating costs of running a hospital. Etc.) Then, there's this pesky question: are those people who were charged more did better or worse (or same?) in terms of their health outcomes- that is, maybe people who were charged less ended up in the hospital again soon after discharge because they got substandard treatment
If they are equal, then, ("Twilight Zone" theme music)... we can ask "Why?" And, even better question is: what are the less expensive hospitals doing (or not doing) to keep their charges low?
Now, here's a very good question: are doctors' charges for those hospital stays the same? I have a feeling that all this differences are NOT due to doctors charges(in fact, they constitute a small proportion of the total bill).
However, the ARE a proverbial low-hanging fruit for the insurers and other payers for.. rightsizing.