Buffalo-area hospitals charge far less to replace joints, treat pneumonia and care for heart patients than other hospitals across the country, federal data released Wednesday shows.
But a Buffalo News analysis found a wide disparity in what hospitals throughout Western New York charge for these and the other most common medical problems.
The findings are based on a review of data released by the office that oversees the Medicare program, offering the public a first look into the cost of health care in this country.
“The price of health care services is complicated and opaque. This information only shows how crazy it is,” said Dr. David Goodman, director of the Dartmouth Atlas of Health Care, who added, “We should know what we’re paying for health care.”
The Buffalo region’s hospitals as a group rank near the bottom in the average charge for the five most frequently diagnosed health problems, including joint-replacement surgery and treatment of sepsis and similar blood infections.
Out of the 306 regions of the country, this region ranked 298th in the average charge for the treatment of heart failure, 301st in the charge for treating sepsis and 305th in the charge for joint replacement.
The $23,300 average charge for joint-replacement surgery at Buffalo-area hospitals is less than half the $52,062 national average charge for the procedure and less than one-quarter of the San Jose regional average charge of $111,891.
In this area, however, the charge for joint-replacement surgery ranged from $37,230 at Kaleida Health’s hospitals to $14,788 at Medina Memorial Hospital. And the charge to care for heart failure and shock ranged from $28,856 at Kenmore Mercy Hospital to $9,075 at Bertrand Chaffee Hospital in Springville.
“There should be a relationship between the actual charge for the service and the reimbursement the hospital receives,” said Jim Dunlop, chief financial officer for the Catholic Health System.
The reasons for the disparity in what hospitals charge for the same procedure are complicated, and the charges don’t reflect what Medicare, private health plans or patients pay for this care.
Still, the release of this data is an attempt to bring more transparency to the issue of how much we pay for health care – a crucial initial step in the ongoing campaign to rein in costs.
“Secrecy invites mischief,” said Bruce Boissonnault, CEO of the Niagara Health Quality Coalition.
The data from 2011 covers more than 3,000 medical centers across the country, including 14 hospitals and one hospital group – Kaleida – in this area. Kaleida’s data was drawn from Buffalo General, the former Millard Fillmore Gates Circle, Millard Fillmore Suburban and DeGraff Memorial hospitals.
The data reveals how often each hospital performed any of the 100 most common inpatient services, the average charge to treat each problem and how much Medicare – the federal health-insurance program for the elderly – reimbursed the hospital for each procedure.
These are facility charges and do not include fees paid to surgeons, anesthesiologists and other doctors who cared for the patient.
“This is the opening bid in the hospital’s attempt to get as much money as possible out of you,” Chapin White, of the nonprofit Center for Studying Health System Change, told the Associated Press.
A Buffalo News examination of the Medicare data found:
• Among the 14 conditions treated most frequently at area medical centers, the Kaleida hospitals charged the highest, or second-highest, average rate to Medicare for nine of the procedures.
• Erie County Medical Center charged the highest average rate for seven of the procedures.
• Medina Memorial Hospital charged the lowest rate for nine of the 14 procedures and the second-lowest rate for two other procedures.
Similar disparities exist among hospitals across the country, and health care professionals say there is little explanation for the wide-ranging charges.
“It’s completely opaque,” said Kristina M. Young, an instructor in the University at Buffalo’s Department of Social and Preventive Medicine, who studies health care delivery.
“In the health care market, the seller is in control of all of the information,” she added.
Experts and hospital administrators say the variation in charges can be driven by differences in the length of stay in the hospitals, whether a patient stayed in an intensive care unit, the medications prescribed or the brand of artificial hip inserted during the surgery.
“There’s a lot of factors that go into charges,” said Mike Sammarco, ECMC’s chief financial officer, who noted the extra cost of operating a regional trauma center.
The different charges also reflect each hospital’s overhead and any markup applied on top of the actual cost for the procedure.
“Many of the patients that are cared for in the Kaleida Health system are very complex,” Michael P. Hughes, a Kaleida Health spokesman, said in an email.
“In addition, the mission of our teaching program does contribute to higher cost of service as we work to educate and train the physicians needed now and into the future,”
The Medicare data also serves as a barometer of health care costs among different regions of the country, and the analysis by The News shows that hospital charges in this region are among the lowest in the United States.
Experts in the delivery of health care warn that the varying charges don’t reflect differences in quality of care and that patients shouldn’t assume that a hip-replacement surgery that carries a charge of $35,000 will lead to better outcomes than the same procedure that carries a $15,000 charge.
“There is no correlation with quality,” said Dr. Thomas Foels, Independent Health’s chief medical officer.
And these charges don’t relate to what Medicare reimburses the hospitals for these procedures.
For example, Kaleida’s hospitals charge $37,230 to replace a joint but receive just $16,040 from Medicare in reimbursement.
At the other end, Medina Memorial charges $14,788 and receives $13,269 in reimbursement.
Medicare has a standard reimbursement rate for each procedure, based on a number of factors that can include whether a hospital carries the additional expense of being a teaching hospital.
Health insurance plans such as BlueCross BlueShield, Independent Health and Univera Healthcare negotiate their own reimbursement rates with hospitals and hospital networks.
Patients who have good health insurance typically don’t see the hospital charges, or even the reimbursement rates. The patients who are most vulnerable to paying the full charge are the uninsured and underinsured.
But hospital administrators here say they take pains to limit the fees passed along to those who don’t have health insurance.
United Memorial Medical Center in Batavia, for example, automatically reduces its procedure charges by 50 percent for the uninsured, and the hospital further reduces fees for those who qualify.
“We know our charges are higher, that’s why we discount our self-pay patients,” said Gregory Horr, United Memorial’s comptroller.
Major joint replacement
or reattachment of lower extremity
Average Rank /Region charge
1. San Jose, Calif.: $111,891
2. San Mateo County, Calif: $109,466
3. Alameda County, Calif: $101,933
U.S. average $52,062
305. Buffalo: $23,300
306. Takoma Park, Md. $22,978
Same procedure, different bill
National survey finds wide variation in charges among hospitals
Septicemia or severe sepsis
Rank Region Average charge
1. Santa Cruz, Calif. $154,303
2. Contra Costa County, Calf. $124,596
3. New Brunswick, N.J. $106,575
4. San Mateo County, Calif. $106,292
5. Modesto, Calif. $100,616
U.S. Average $45,935
300. Baltimore $20,796
301. Buffalo $20,726
302. Winchester, Va. $18,911
303. Rochester $18,484
304. Altoona, Pa. $18,396
305. St. Joseph, Mich. $17,159
306. Appleton, Wis. $16,683
Major joint replacement or reattachment of lower extremity
Average Hospital City Cases charge
Kaleida Health Buffalo 479 $37,230
United Memorial Medical Center Batavia 46 $31,655
Erie County Medical Center Buffalo 83 $27,731
Olean General Hospital Olean 49 $27,564
Mount St. Mary’s Hospital And Health Center Lewiston 61 $24,491
Niagara Falls Memorial Medical Center Niagara Falls 14 $23,266
Sisters Hospital Buffalo 138 $22,643
Kenmore Mercy Hospital Tonawanda 204 $20,987
Mercy Hospital Buffalo 53 $20,775
TLC Health Network Gowanda 31 $17,756
Brooks Memorial Hospital Dunkirk 47 $17,027
Eastern Niagara Hospital Lockport 18 $16,991
Medina Memorial Hospital Medina 13 $14,788
Source: U.S. Centers for Medicare & Medicaid Services email: firstname.lastname@example.org